The many features of contract logistics

The services of contract logistics are tailored to each individual customer’s needs. For this reason, the features of contract logistics are just as varied as the customer needs are. They range from precisely timed deliveries of supplier parts to assembly lines in the automotive industry and the operation of logistics centers to the placement of red sombreros on those well-known tequila bottles. In the following section, selected logistics services will show the variety offered by this segment.

Precise delivery to the line

Just in time and just in sequence are terms that are closely associated with the automotive industry. In these concepts, materials needed for the production process are delivered to the site at the exact time and in the correct sequence. This eliminates the costly storage of the diverse types of parts that are needed to produce the countless variety of cars that come with all sorts of colors, equipment and seat covers.

Through the implementation of production-synchronized delivery of entire component sets like car seats, leaner, flow-based structures can be introduced. But if the production process is disrupted by a lack of parts, the resulting costs will be extremely high. The shipper or the automotive manufacturer and the contract-service provider have a close, trusting working relationship to ensure the reliable delivery of supplies. Contract-logistics providers assume the responsibility of delivering supplier parts directly to the assembly line.

Delivery parks

Today, so-called industry or delivery parks are being increasingly used to ensure reliable, high-level supply services. Here, several delivery companies establish a base near the customer and form a location-linked alliance. Contract-service providers then deliver the parts of all suppliers at the exact time that they are needed by the customer.

Frequently, contract-service providers even perform simple assembly jobs. For instance, they put together instrument panels or assemble entire cockpits, and these components are delivered to the line at the precise second they are needed. Through the use of delivery parks, logistics-service providers become the interface between the automotive manufacturer and their parts suppliers.

Global transport of knocked-down vehicles

High customs duties for finished products in international markets frequently prompt companies to pre-make individual components of parts needed for the end product. These components are shipped abroad and then undergo final assembly there. This practice is called completely knocked down (CKD) or semi-knocked down [Semi knocked down] (SKD). It places high demands on logistics, particularly in terms of packaging and monitoring expenses. In addition, high demands are placed on delivery reliability - as a result of the close link to the production schedules of the receiving plant. For this reason, numerous companies outsource these responsibilities to logistics specialists as contract-logistics services.

White eventually adds color

Textile production in Asia is inexpensive - but it takes several weeks to ship goods to Europe. As a result, the fast-paced textile sector needs solutions that address this problem. To take advantage of the low production costs, many textile companies produce mass products like white T-shirts and do not dye them until they reach Europe. This enables the T-shirts to be easily and quickly adapted to the latest trends. This principle of postponement is designed to hold a product in a neutral state for as long as possible at the start of the logistics channel Logistics without its being assigned to a customer or a submarket. In this process, the individual features of the product - such as the dyeing - are added at a late stage.

Postponement is a good idea when the number of product variations is large and the customers are widely scattered. In this case, it is very difficult to forecast the time and the quantity of various product variations that will be needed by a certain customer. Contract-logistics providers frequently perform the last production step that precedes delivery to the customer. This responsibility goes far beyond the simple transport of a good from Point A to Point B.

Additional services in the warehouse

The fact that contract logistics is more than transport is illustrated by those well-known Sierra tequila bottles. In a first step, a logistics-service provider warehouses these bottles minus their hats.

In a second step performed sometime later, employees of the logistics-service provider slip on the bottles’ trademark - the red sombrero - and then package them for shipment to individual supermarkets.

Logistics centers for after-sales service

Machinery and installations consist of countless parts. When a part breaks, no customer wants to wait a long time for a replacement. This requirement places high demands on replacement parts or after sales logistics. After all, the replacement parts must be stored if a high level of service for repairs and returns is to be ensured.

In after-sales logistics, contract-logistics providers operate facilities like distribution centers. In this work, they assume responsibility for replacement-part operations on behalf of their customers. In addition to storage, replacement parts are also inspected at receiving and placed in the repair cycle. Repackaging and redelivery to the customer follow.