The secondary logistics conundrum
Gokul Anand
Helping supply chain tech firms by managing their clients through effective Customer success strategies, technology and supply chain expertise PMP|LSBB| IIM-K
Secondary logistics- A term used in the logistics industry to indicate the movement of goods from a firm's warehouse to a distributor, aided by a sale order processed between the two parties through an ERP.
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What makes the secondary logistics a complex problem to solve? Lets jump in!
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You work as a logistics manager for an FMCG/ Electronics/Consumer Durables firm. On an average day, you are typically juggling between multiple phone calls:
Your sales team is often divided into different groups based on the different customer types, distribution channels, and geographic regions.
These clients are frequently distributors, super stockists, etc. In the secondary logistics sector, the majority of distributors are classified as
1. General Trade: Institutional, regional, and super stockist distributors, among other conventional distribution routes
2. Modern Trade: Chain stores like Big Bazaar, Reliance Retail, Lifestyle stores,?Tata Croma etc.
3. E-commerce: The likes of Amazon, Flipkart, and Snapdeal.
4. CSD: Army Canteens, Police Canteens, Canteens in Railway Quarters, etc.
While order management and follow up is done by the sales function, it is left to the logistics manager to execute these orders with varying and conflicting priorities. Let us look into some of these constraints below.
1.Consignment clubbing
For instance, when sending a consignment to an army canteen, one cannot send/ club a consignment of another client, as per central canteen's rules, while one cannot club an e-commerce delivery to a Flipkart since this is scheduled, missing the slot will mean holding inventory for longer times and loss of sale.
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2.Cost optimization
Most orders from distributors are in general, small in volume over elongated periods of time in a month. Also remember these orders are very urgent and mostly get stuck in the carriers’ warehouses during transhipments, on average 3 days. Due to this, logistics managers end up dispatching consignments in partial loads through both organized and small-time partial load courier companies which leads to a high freight cost per unit. There is a huge opportunity for consolidation of partial loads into Full Truck Loads.
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3.Route optimization
Most logistics managers in companies plan for consignment clubbing based on fixed routes basis- "intuition". There is no science to this or at the least any linear programming in play. Should the consignment should go from Delhi to Ghaziabad first and then drop the next load at Noida or the other way round? Besides, who is the cheapest carrier in this lane? What drives this decision - cost, time, or service? Lack of data-driven decision making is a problem many logistics managers face.
Phew! In addition to this 3-Dimensional problem, logistics managers also have to deal with multiple logistics service providers and ensure everyone gets fair share of business.
So, how can all these issues be solved by a logistics manager who is neck deep in day-to-day operations?
This solution plans your dispatches from the moment a sale order is plugged into your ERP based on distribution channels and customer priorities. Pando then auto-allocates each shipment to carriers based on cost and route optimization.
This is done at scale across different depots and warehouses, eliminating manual intervention, benefits of which are being experienced by 35+ global and Indian FMCG/consumer durables giants in the industry, who are using Pando.?????????????????????