How do the cars end up in the showrooms? How are the cereal aisles always stocked? A big part of the answer is the intricate world of transportation and logistics – made up of cargo ships, trains, freight unloading services, bubble wrap, and a whole lot more. 

While this world can’t possibly be fully explained this one single article, here are 3 key terms explained.

Supply Chain

The supply chain often involves the end-to-end process of moving a product or service from its raw material sources to the hands of the final consumer. In this way, it encompasses various stages, including procurement, production, transportation, and distribution, because it aims to maximize efficiency and cost-effectiveness.

Consider a company that manufactures smartphones. The supply chain for these phones begins with sourcing raw materials like metals, plastics, and electronic components. These materials are then transported to the factory, where they are assembled into phones. After production, the smartphones are shipped to distribution centers and eventually to retail stores, where customers purchase them.

Freight Forwarder

A freight forwarder is often a company or individual who acts as an intermediary in the transportation of goods. In this way, they manage the logistics of shipping, handling documentation, customs procedures, and arranging various modes of transport, as they simplify the complex process of moving cargo across borders and regions.

Suppose a clothing manufacturer in the United States wants to export a new clothing line to Europe. They hire a freight forwarder who coordinates the entire shipping process. The freight forwarder arranges for the collection of clothing from the manufacturer’s facility, manages customs paperwork, selects the best shipping method (e.g., air or sea freight), and ensures the products reach European retailers.

Just-In-Time (JIT)

Just-In-Time (JIT) is often a strategy in logistics and inventory management where materials or products are delivered precisely when they are needed in the production process. In this way, the need for excessive inventory storage, reduced carrying costs, and enhanced production efficiency is greatly minimized, as otherwise, there may be unnecessary waste and increased expenses.

For example, in an automobile manufacturing plant, JIT is applied by receiving components and parts only as they are needed for assembly. For instance, if the plant requires a specific type of tire for a vehicle, the tire supplier delivers the exact number of tires required at the right time. This approach means that the factory doesn’t have to store a large inventory of tires, reducing storage costs and waste.

Whether you’re looking to better understand your own business operations, starting a course, a simply curious, it’s a good idea to have some understanding of how transportation and logistics work.  And to summarize, supply chains guide the journey of products from inception to consumption, freight forwarders act as the orchestrators of seamless logistics, and the Just-In-Time strategy minimizes waste and optimizes efficiency.