Logistics Facility Planning & Improvement | Related Knowledge Menu

jp tw Email MAP___ By Logistics Technology Research Institute
Supply Chain Hub Selection (Structure & Characteristic Comparison)

3-10. Logistics Facility Planning in the Supply Chain and Hub Type Comparison

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.

1-1. Types and Domains of Logistics in the Supply Chain

Throughout the entire supply chain (procurement, production, and sales), the flow of logistics is broadly classified by its role.

Structural diagram of production logistics and sales logistics in the supply chain

🔍 [Detailed Diagram Explanation] Boundary Structure of "Production Logistics" and "Sales Logistics" in Overall Logistics (image2151.jpg)

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).

  • Procurement & Production Domain (Production Logistics / Material Flow): This is the "flow of goods" centered on factories and raw material warehouses. Because cargo moves here based on a pre-formulated "production plan," it is a world where demand fluctuations are calm, and planned control and integrated pallet movement (leveling) are easy.
  • Sales Domain (Sales Logistics / Physical Distribution): This is the "flow of goods" heading toward distribution centers, wholesalers, retail stores, and end customers (BtoB/BtoC/CtoC). Because this moves triggered by "order information" from the customer side, it is an uncontrollable world that must absorb high-mix small-lot orders, specified delivery time limits, and intense shipping fluctuations due to seasons or 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.

1-2. 5 Major Classifications of Logistics and Characteristics by Domain

① The 5 Logistics Classifications Constituting the Supply Chain

1. Procurement Logistics

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.

2. Production Logistics

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).

3. Sales Logistics

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).

4. Waste Logistics

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.

5. Venous Logistics (Reverse Logistics)

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).

② Structural Differences Between Production Logistics (Plan-driven) and Sales Logistics (Demand-driven)

③ Transition to BtoB, BtoC, and CtoC Logistics and Changes in Cost Structure

BtoB (Business-to-Business Logistics)

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.

BtoC (Business-to-Consumer Logistics / EC Mail Order)

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.

CtoC (Consumer-to-Consumer Logistics / Flea Market/Auction)

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).

④ The Impact that CtoC (Consumer-to-Consumer EC) Logistics has Brought to the Logistics Frontline

💡 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.

2. Hub Characteristics in Sales Logistics (Manufacturer Product Warehouse vs. Retail/Wholesale Distribution Center)

Warehouse characteristics of sales logistics

🔍 [Detailed Diagram Explanation] Comparison and Proposal Axes for Manufacturer Product Warehouses and Retail/Wholesale Distribution Centers (image151.jpg)

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.

  • Manufacturer Product Warehouse (Left Column): The purpose is to buffer between production and sales (product storage). The number of varieties is small, numbering in the hundreds, and the packaging form is primarily pallet units (P), with long-distance delivery being conducted. Because the packaging form and varieties are fixed, "logistics equipment proposals centered on automated warehouses (hardware-led mechanization and labor-saving)" demonstrate the highest return on investment.
  • Retail/Wholesale Distribution Center (Right Column, Red Box Area): The purpose is sorting for sales stores and individuals (order picking). The number of varieties is massive, from thousands to hundreds of thousands, and the packaging form is mainly case/piece units (C/B), with short-distance, small-lot, high-frequency deliveries (1 to 3 times a day). Because there is a lot of manual work and frequent variety changes, making hardware automation difficult, "operational proposals centered on a Warehouse Management System (WMS) (software-led improvement of picking accuracy and efficiency)" are essential.

Comparative Contrast of Hub Types

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.