In order to optimize advanced logistics facility planning, it is essential to understand the differences between the domains of "production logistics" and "sales logistics" in the overall supply chain, as well as the changes in commercial transaction formats among BtoB, BtoC, and CtoC.
Depending on the type of hub your company seeks (whether it is a manufacturer product warehouse or a retail/wholesale distribution center), the area to invest in and the approach to reducing logistics costs will change significantly.
Throughout the entire supply chain (procurement, production, and sales), the flow of logistics is broadly classified by its role.
The diagram above is a basic model showing how production logistics and sales logistics are divided within "Logistics," which encompasses the entire supply chain (procurement, production, sales).
Insights for Facility Planning: As indicated by the dashed line in the center (the boundary between warehouse and distribution center), a warehouse handling production logistics pursues "storage efficiency and bulk transport (hardware-focused)," whereas a distribution center handling sales logistics pursues "shipping accuracy and picking speed (software-focused, such as WMS)." This requires different approaches to logistics facility planning.
The logistics domain of procuring raw materials, components, and auxiliary materials needed for product manufacturing from domestic and overseas suppliers and supplying them to factories.
The logistics domain covering inter-process movement of raw materials within a factory, storage of semi-finished products, and transfer of finished products to the company's own warehouse or distribution center (DC).
The most important and complex logistics domain, delivering products from distribution centers to end users such as wholesalers, retail stores (BtoB), and individual homes (BtoC).
The logistics domain covering the collection and transport of unnecessary packaging materials, cardboard, waste products, etc., generated during the production and logistics processes to disposal sites.
A logistics domain corresponding to environmental protection and a circular society, undertaking the "return and collection" of initial defective products or misdelivered items, and the "collection and redistribution" of recyclable materials (like pallets).
Because cargo moves based on the factory's "production plan" and "shipping schedule," it is possible to accurately predict and level out "when, where, what, and how much to transport" in advance. Since demand fluctuations are small, this is an area where hardware implementation and mechanization (labor-saving investments), such as unit loading (integrated pallet transport) and automated warehouses, very easily demonstrate their return on investment.
Because it operates triggered by "orders" from stores and final consumers, the outgoing volume dramatically rises and falls (fluctuates) due to factors like days of the week, seasons, weather, special sales, and television exposure. Because it must meet strict customer demands such as "I want it right now," "same-day delivery," and "designated time slots," accurate prior data analysis and a flexible work structure (software management by WMS) are required.
Characteristics: Delivery destinations are stores and business offices. The shipping lot per delivery destination is large, and "consolidated large-lot delivery" in pallet units or case units is mainstream. Work efficiency is high, and the logistics cost per item can be kept low.
Characteristics: Delivery destinations are countless individual homes. The shipping lot is a "fragmented small lot" of 1 to several items. Piece picking (picking individual items), individual inspection, and individual packaging become necessary, drastically increasing the number of work hours inside the warehouse.
Characteristics: Logistics where an individual sends to another individual. Rapidly expanding due to the rapid penetration of flea market apps (Mercari, etc.) and internet auctions. The packaging, size, and form of the products are not standardized, creating a new logistics flow involving collection and sorting operations via convenience stores and PUDO (delivery lockers).
While the sizes of product cardboard boxes are relatively standardized in BtoB and BtoC, in CtoC, because individuals list and pack the items, the packaging—such as paper bags, reused existing boxes, and envelopes—is irregular (non-standard). This results in cases where items cannot be read or transported by conventional high-speed sorters (automated sorting machines), necessitating special image sensors or manual sorting processes.
In CtoC logistics, senders are dispersed across multiple points such as individual homes, neighborhood convenience stores, and delivery lockers installed at stations (PUDO). Courier companies must collect small-lot packages scattered nationwide and consolidate them once at a regional hub before putting them on trunk transport, which is a factor driving up the collection logistics cost of the first mile.
To realize "anonymous delivery," which protects the personal information of both the seller and the buyer, data linkage using QR codes or barcodes is mandatory. In logistics facility planning, it has become important to introduce advanced information APIs and WCS (Warehouse Control Systems) that contactless link personal information with the package, not just handling physical cargo.
💡 Why Smaller Lots (BtoC/CtoC) Make It Harder to Lower Logistics Costs
1. Explosive Increase in Work Hours: Because products are picked one by one (piece picking) from mass-stored inventory, and individually packed, inspected, and labeled, labor costs increase.
2. Decrease in Delivery Density and Re-delivery Costs: Unlike BtoB, where thousands of items can be unloaded in a single delivery, BtoC/CtoC involves small-volume, high-frequency deliveries to individual homes. This necessitates an increase in the number of vehicles arranged, causes driver shortages, and leads to re-deliveries due to absences, pushing up transport and delivery costs in the last mile.
The diagram above is a comparison chart showing the operational characteristics of a "Manufacturer's Product Shipping Warehouse" and a "Retail/Wholesale Distribution Center (TC/DC)," as well as the differences in effective proposal approaches for each.
| Comparison Item | Manufacturer's Product Warehouse | Retail/Wholesale Distribution Center (TC/DC) | Structural Differences in Facility Planning |
|---|---|---|---|
| Primary Purpose of Warehouse | Buffer between production and sales (Inventory storage/adjustment) | Sorting for stores/individuals (Order picking) | While manufacturers are a long-term storage type, retail/wholesale is a pass-through/high-speed sorting type focused on "how to keep goods flowing quickly without stagnation." |
| Handled SKUs (Number of Varieties) | Hundreds to thousands (Limited to own products) | Tens of thousands to hundreds of thousands (Frequent replacements occur) | Retail/wholesale has an exponentially larger number of items, with intense additions of new products and discontinuations, making variable location (free location) management mandatory instead of fixed racks. |
| Handled Packaging Form (PCB) | Primarily Pallet Units (P) | Primarily Case (C) / Piece (B) Units | Manufacturers focus on large-lot pallet handling, whereas retail/wholesale has an extremely high ratio of manual and small-lot work such as piece picking. |
| Delivery Frequency & Format | Medium/long-distance inter-hub transport (1 time/day to week) | Short-distance route delivery / individual delivery (Multiple times a day) | Retail/wholesale must respond to store delivery time limits (time services), making shipping berth turnover rates and truck docking management severe. |
| Improvement & Investment Approach | Mechanization & labor-saving via automated warehouses and AGVs | Work accuracy & traffic line optimization via WMS & work support (Handy/DPS) | Manufacturers can easily implement hardware automation due to standard packaging forms, but retail/wholesale requires flexibility in software (systems and on-site operations) capable of withstanding fluctuations in packaging forms. |