Breaking into the Shipper’s Door: Logistics Solutions from “How” to “Why”

Editor’s Note:

For the service industry, “Solution” is a term as straightforward as it gets. A logistics service provider’s comprehensive, tailored package of services designed to meet a specific logistical need can be referred to as a logistics solution.

It typically encompasses multiple stages, including transportation, warehousing, last-mile delivery, order processing, and inventory management, with the aim of addressing the challenges faced by shippers in their logistics operations, enhancing efficiency, reducing costs, and ultimately achieving optimized logistics performance.

However, do you really understand the solution? What is the key to a successful logistics solution? And how can you use a single solution to win over shippers?

Today’s article is a guest contribution from a seasoned logistics and supply chain expert. Grounded in real-world logistics solutions, it explains both how and why:

To start from solving The “how” question—namely, how to translate shippers’ personalized orders into standardized operating procedures for logistics operators—has shifted to addressing the “why” question: how to further enhance efficiency and reduce costs by rethinking the logic and parameters underlying order generation.

I hope it brings you even more value.

Providing logistics services to shippers involves an indispensable step known as… “Solution.”

Depending on the nature of the logistics services, solutions may include transportation solutions, warehousing solutions, integrated logistics solutions, and more. A solution represents a logistics provider’s diagnosis and tailored recommendations for a client’s logistics needs, and the quality of these solutions largely reflects the provider’s operational capabilities.

When selecting a logistics provider, shippers typically conduct an initial screening based on the proposed solutions; only those that meet the required criteria advance to the next round. Therefore, It can be said that the solution serves as a key to open the door for logistics companies to gain access to shippers.

How can logistics companies enhance the quality of their solution offerings? The key is to start with the underlying logic of the solutions: clearly identify the fundamental problems they aim to address, understand the core approaches for solving those problems, and continually expand the array of effective tools and strategies. Only by doing so can they steadily elevate the sophistication of their solutions.

The most fundamental issue that logistics solutions aim to address is The “HOW” question: How can we transform shippers’ customized orders into standardized operating procedures for logistics operators?

Orders from shippers are generated based on each shipper’s specific business needs, with highly customized requirements for delivery timelines, operational procedures, pickup protocols, and delivery instructions. For example, some orders involve full‑truckload shipments, while others are less-than‑truckload; some demand urgent delivery, whereas others have more flexible timeframes; some cover long distances, while others are for short‑haul routes; some must be transported on pallets, while others can be handled without pallets; some are destined for factories where designated personnel unload and receive the goods, while others are delivered to warehouses, requiring the carrier to handle unloading, sorting, and other tasks; some are routed to store‑in‑store locations in shopping malls, necessitating unloading, carrying, moving items upstairs, and placing them on shelves; and still others are sent to bonded warehouses, where the carrier must also assist with customs inspection and related formalities.

For the logistics departments of shippers, the top priority is to ensure that production needs are met. Therefore, as long as production demands are met, regardless of the logistics requirements of any given order, ensuring on-time fulfillment must be the top priority; only then should we consider fulfillment costs and work to reduce the company’s logistics expense ratio.

For logistics operators, the key is to reduce operating costs. On the premise of ensuring basic service quality, only those who can reduce operating costs further will avoid being eliminated in the fiercely competitive market.
The most effective—and arguably the only—way to reduce operating costs is through economies of scale, continuously spreading fixed costs over a larger volume. To achieve such scale, standardized operations are essential. Standardization is replicable and can be scaled up, enabling large‑scale efficiency. However, standardizing logistics processes also means that requirements for product types and handling procedures become more narrowly focused; only the most homogeneous product categories and handling steps lend themselves to effective standardization and scaling. Consequently, to boost efficiency and cut costs, logistics providers tend to concentrate on specific product types and operational workflows, thereby enhancing standardization and driving greater specialization. This, in turn, creates a tension with shippers’ highly diverse and customized logistics needs.
This is precisely where logistics solutions come into play.

The solution begins by segmenting the shipper’s logistics needs, breaking them down according to product type, shipment volume, and operational stage, and identifying opportunities to standardize workflows at each stage. Subsequently, leveraging the available logistics resources, the company assigns specific operational tasks to the corresponding capabilities, implementing standardized procedures. By integrating these standardized processes across all stages, the solution ensures flawless fulfillment of every order for the shipper.

Just like building with LEGO bricks, each modular component is standardized, allowing you to construct an endless variety of shapes. In this way, logistics solutions can enable… “Having it all”: On the one hand, we must ensure flawless fulfillment of shippers’ customized orders; on the other, we must achieve low‑cost fulfillment through standardized operations. However, when it comes to breaking down logistics requirements… The finer the granularity, the more modules require communication and coordination. Therefore, Another key function of the solution is the planning and design of communication and coordination processes and mechanisms. It is necessary to design data definitions and templates for information exchange with each standardized module, establish mechanisms and workflows for both routine and ad hoc information communication with these modules, and define performance‑guarantee and mutual‑check mechanisms among them. For example, whether order processing is segmented and distributed at the source or consolidated at the end‑point significantly impacts the efficiency of order‑fulfillment communication.

However, with respect to the logistics cost ratio of cargo‑owning enterprises, The “HOW” question—namely, how to fulfill orders at low cost—remains a post‑order‑generation consideration, focusing solely on optimizing the execution of already‑fixed orders. To reduce logistics cost ratios and enhance supply chain efficiency, the solution cannot stop at the “HOW” level; it must go further to examine how to influence the very creation of shippers’ orders. That is The “WHY” question: Why is the order structured this way, and how can we further improve efficiency and reduce costs by revising the order‑generation logic and parameters?

The factors that influence the production logic of shippers’ orders generally include inventory layout, inventory strategy, and order‑placement strategy, among others.

Take sales logistics as an example. Inventory layout refers to the strategic placement of physical inventory, which determines order fulfillment lead times, delivery distances, and logistics modes. Some companies opt for a decentralized inventory strategy, locating stock close to consumers, while others adopt a centralized approach, consolidating inventory at their facilities for more efficient utilization. The optimal inventory layout for each company depends on numerous factors, including product category, price density, shelf life, and more.

Inventory strategy primarily refers to inventory quantity planning, including metrics such as days of inventory on hand and fill rate. Based on a balanced alignment among production capacity, production takt time, sales forecasts, and promotional cadence, companies determine appropriate inbound and outbound flow rates for each warehouse—ensuring high fill rates while keeping inventory levels at an optimal, low‑water mark.

Ordering policy refers to determining the specific details of each order—such as order lines, quantities, and timing—based on the shipper’s customers’ ordering cycles, the shipper’s order lead time, the economic order quantity, and in conjunction with the shipper’s inventory strategy.

When shippers generate orders, incorporating logistics‑operation and fulfillment considerations alongside inventory placement, inventory strategies, and order‑processing policies can not only enhance supply‑chain efficiency but also effectively reduce logistics‑fulfillment costs.
However, it is extremely challenging for logistics providers to become involved in shippers’ order‑generation processes. There are two main reasons: first, the order‑generation logic lies at the heart of a shipper’s supply‑chain management and is considered proprietary, so shippers are typically reluctant to share it with partners; second, shippers generally believe they understand their own supply chains better than external logistics partners do, and thus doubt the latter’s ability to manage supply chains as effectively.

Therefore, For logistics enterprises to engage with the order‑generation processes of shippers, they generally need to address the following key considerations:
1) Possesses a deep understanding of the commodity flow and supply chain within the shipper’s industry and product category.
One must thoroughly master and comprehend the commercial‑flow aspects of the industry and product categories, including marketing models, sales channels, promotional activities, and consumer experience. Additionally, a deep understanding of the supply chains and logistics operations of both upstream and downstream partners within the supplier’s ecosystem is essential. Furthermore, one should be able to articulate the underlying logic and cutting‑edge theoretical frameworks governing supply‑chain operations in the industry and across product categories, ultimately becoming a subject‑matter expert.
2) Possess well‑documented case studies of operations in the same or similar industries and product categories, with in‑depth post‑mortems and summaries of these cases; demonstrate detailed experience in business execution and exception handling; and be capable of conducting iterative analyses of operational workflows and management systems.
3) Possesses a deep understanding of the current state of supply chain operations at client companies, can conduct preliminary quantitative analyses of their supply chains by organizing and mining historical logistics data, and, drawing on industry‑specific and category‑specific case studies, offers well‑grounded recommendations and insights to optimize their supply chain performance.
4) When communicating with shippers, logistics companies should not only engage with the shipper’s logistics department but also maintain open lines of communication with its sales, planning, finance, and other supply-chain‑related departments. This enables them to promptly gain insights into the shipper’s current operational status and challenges across the entire supply chain, while creating opportunities to present solutions that leverage order‑generation adjustments to enhance supply-chain efficiency.

In summary, the key to a logistics solution is to address two issues: one is… The “HOW” question concerns how shippers’ customized orders can be translated into standardized operational procedures for logistics enterprises; the other is the “WHY” question, which addresses the issue of adjusting the logic underlying the generation of shippers’ orders.

Through From From “HOW” to “WHY,” we progressively delve into the supply chain operations of shippers, achieving end-to-end integration and, from a full‑chain perspective, enhancing supply chain efficiency while reducing supply chain and logistics costs.