Every new car is a marvel of coordination, even before it reaches the end of the assembly line. Thousands of components—engines, transmissions, tires, and microchips—converge at a factory from a global network of suppliers. Business-to-business (B2B) logistics is how every part shows up at the right place and time. 

For manufacturers, wholesalers, and distributors, mastering this puzzle creates a competitive advantage. With rising customer expectations, reliable delivery creates customer satisfaction and cultivates the long-term relationships critical to B2B success. 

Let’s take a deeper look at how B2B logistics works and some best practices to help you run a well-oiled logistics operation.

What is B2B logistics?

B2B logistics is the planning and execution of procuring, moving, and storing raw materials, parts, and finished goods from one business to another. Unlike business-to-consumer (B2C) logistics, which typically involves shipping numerous small parcels to individual customers, B2B logistics operates at a much greater scale and level of complexity. It’s a high-stakes strategic function, and a single error has the potential to create several challenges, including production halts.

The main objective of B2B logistics companies is to orchestrate the flow of goods along the supply chain, from the initial manufacturer to a wholesaler, distributor, or retailer. This includes several activities, including inventory management, warehousing, transportation, order processing, and materials handling. The goal is to ensure that goods are in the right place, at the right time, and in the right condition to meet the operational needs of another company.

B2B transactions frequently involve large bulk orders, palletized shipments, and specialized freight regulations. This requires different shipping and handling procedures compared to the direct-to-consumer (DTC) model. The relationship between B2B clients is typically long-term and contractual, and consistency in logistics operations is critical to avoid business interruptions. A single delayed shipment could cause stockouts, creating logistics challenges and production shutdowns.

Best practices for B2B logistics

• Create strategic partnerships
• Automate parts of the supply chain
• Track relevant KPIs
• Optimize inventory management systems
• Encourage communication

Well-managed B2B logistics can lead to increased cost efficiency, an improved customer experience, and lower costs for your business. Here are a few best practices to implement to achieve your goals: 

Create strategic partnerships 

The relationship you build with your supply chain partners is the foundation of a B2B logistics strategy. Rather than viewing logistics companies as mere vendors, consider them strategic allies. A good logistics provider will offer more than transportation service—it will offer expertise, technology, and a network that becomes an extension of your own operations.

When choosing a logistics partner, look beyond competitive pricing. Also consider their scalability, reliability, industry expertise, and technological capabilities. A familiarity with your industry is another factor to keep in mind when looking for the ideal partner.

Building long-term relationships with a core group of carriers and third-party logistics (3PL) providers can lead to volume discounts, preferential service during peak seasons, and a collaborative approach to problem solving. These providers can be invaluable for navigating logistics challenges. For example, when you need to ensure compliance with transportation regulations, they can help by adjusting to evolving rules and providing documentation for audits.

Automate parts of the supply chain

If you’re looking to achieve operational efficiency and exceed customer expectations, implementing supply chain automation is a non-negotiable step. A sophisticated transportation management system (TMS) or warehouse management system (WMS) can automate a vast portion of the logistics process.

Real-time tracking is now a baseline expectation. Look for vendors offering clients systems that let you track the location of your shipments so you can plan your operations accordingly. But tracking goes deeper than a GPS dot on a map—it includes access to real-time data on shipping, inventory, transit times, and delivery costs.

Advanced technology like this can help identify bottlenecks and optimize routes that reduce delivery times and fuel consumption. This makes it possible to manage inventory across multiple distribution points. A data-driven approach will improve visibility and control over your entire supply chain.

Track relevant KPIs

Establishing and monitoring key performance indicators (KPIs) is essential for evaluating your profit margins and logistics operations and finding areas for improvement. These metrics provide objective insights into your company’s performance and help ensure your vendors are adhering to service level agreements (SLAs) with clients.

Essential B2B logistics KPIs include:

• On-time delivery rate. This refers to the percentage of orders delivered by the scheduled date.

• Order accuracy. Order accuracy is the rate of orders shipped without errors (e.g., correct items, documentation, and quantities).

• Inventory turnover. How quickly you sell and replace your stock is your inventory turnover rate, a key indicator of effective stock management.

• Cost per shipment. This metric tracks shipping and transportation expenses with the goal of identifying opportunities to reduce costs.

• Perfect order rate. This refers to the percentage of orders delivered on time, complete, damage-free, and with correct documentation.

Regularly reviewing these KPIs and requesting customer feedback through reviews and surveys provides an integrated view of your performance. It also gives you a deep understanding of how to improve customer satisfaction. You can use this information to refine processes, train staff, and work with your partners to deliver better customer service. You will also be better equipped to make informed decisions.

Optimize inventory management systems

Managing inventory is a delicate balancing act. Holding too much stock can tie up capital and increase storage costs; holding too little risks stockouts, disappointed clients, and interrupted operations. An innovative approach to inventory management is crucial for B2B success.

This starts with accurate demand forecasting, using market intelligence and historical data to anticipate future needs. Using an inventory management system that integrates with your ordering and sales platforms helps maintain optimal stock levels and ensure timely deliveries. Setting up automated reorder points and conducting ABC analysis (i.e., ranking your products from most to least important) can improve stock management.

The layout and operations of your distribution centers are equally important. An optimized warehouse design reduces travel times for pick-and-pack operations, minimizes handling errors, and improves safety by keeping high-traffic areas clear.

Encourage communication

B2B logistics is a team sport that involves multiple stakeholders: suppliers, manufacturers, warehouse staff, carriers, and the end client. Clear and consistent communication channels are the glue that holds the entire supply chain together. A breakdown in communication poses a significant challenge, leading to costly errors, delays, and possibly a damaged brand reputation.

A centralized communication platform or protocol helps your partners work with consistent information, which is especially critical if you’re managing multiple suppliers or coordinating complex shipments. Whether you use a sophisticated project management tool or a simple messaging platform like Slack, ensure everyone on your internal team has clear expectations about how and when to provide updates. 

Communicate potential delays due to labor shortages, weather, traffic, or port congestion. Informing a client about a potential issue before they discover it themselves shows transparency and allows everyone to adjust their plans. This level of customer care can build trust and solidify long-term relationships.