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To maintain operational efficiency and agility in supply chain operations, smart logistics management is essential. Logistics comprise of multiple functions each of which contribute to how efficiently and accurately goods are moved from one stage to another. We take a look at these major functions of logistics management and understand their role and important contribution in smart supply chain management operations.
Understanding logistics management functions – Meaning and overview
Logistics management comprise of different activities of the supply chain to ensure seamless movement of goods. The goal of logistics functions is to ensure that deliveries happen in time, customer satisfaction is enhanced, costs are reduced, and processes are optimised. Organised logistics management has its advantages in that it enables businesses to innovate, adapt and build customer-centric solutions to stay agile and competitive.
Example of efficient logistics management function:
Transportation planning is a key logistics function. Though logistics and transportation are often used interchangeably, transportation refers to the physical movement of goods in vehicles (or any other) whereas logistics management involves the entire operation.
When it comes to the functions of logistics management in transportation planning, it involves:
- Route optimisation to keep to timelines, minimise fuel consumption, and reduce empty miles
- Fleet management for scheduled maintenance, minimise transit time, and operations
- Delivery scheduling and timelines based on identifying the most efficient transport method
- Resource management based on demand and availability
6 Key functions of logistics management in SCM
In this section we take a look at the major functions of logistics management and how it impacts overall operations.
1. Material handling
For any business, material handling is a challenging task that involves more than loading and unloading of goods. It requires a planned approach for moving and arranging goods using manpower, equipment and automated machines. Without skill, there are higher chances of goods getting damaged at this stage, causing delay in the production process and additional expenses.
2. Inventory and warehouse management
Inventory and warehouse managements is among the most critical functions of logistics management – after all, the entire supply chain operation is dependent on the availability of stock at the right time.
Logistics companies today use AI tools and advanced technologies to automate the entire inventory management and warehousing process. This enables them to get data on stock levels, analyse stock movement, study returns patterns, plan restocking, and get insights on customer behaviour.
Understanding stock and inventory levels also enable businesses to keep to production schedules and schedule deliveries as per production requirements. This goes a long way in utilising warehouse space optimally. Moreover, it also leads to minimum overstocking, wastage and damage.
Smart warehouse management is a way for accurate and efficient order picking – the process in which once an order is placed, the right products are picked from the shelf. This is critical for the success of B2C and eCommerce businesses where a diverse product range in available to customers.
3. Packaging and labelling
A common challenge in logistics, especially in returns management is wrong labelling and packaging causing damages while shipping (especially for B2C audiences).
All products require specific packaging. Commonly used packaging material like cardboard boxes, paper, bubble wraps, or eco-friendly packaging, are at times insufficient. For instance, perishable food, pharmaceuticals, require temperature-controlled packaging or cold chain logistics solutions, and other precautions while shipping to avoid contamination or damage.
Similarly, incorrect labelling can lead to non-delivery or returns. For instance, while labelling, if the shipping and billing address are interchanged, then the package will incorrectly be shipped to a wrong location (note – this is when the two addresses are different). Or if the shipping address is incomplete, it can lead to returns.
Not surprisingly, logistics companies are using tools to resolve such challenges, which manages to capture all relevant details and leaves little room for human errors or incomplete information.
4. Transportation and shipping
Transport and shipping are important logistics components and play a prominent role in the success of a company.
The task of transporting and shipping a package is not a light one. From identifying the type of transport (e.g., containerised transport), to packaging, clearance, customs and compliance, documentation, route optimisation, delivery and proof of delivery, there are multiple logistics functions and processes involved to ensure seamless transportation.
Transportation is a vital part of supply chain management. In most cases, logistics providers today rely on advanced transportation management systems to automate and simplify the task. The goal being to maintain operational efficiency, identify potential bottlenecks and their solutions, reduce transportation costs, improve last and first mile delivery, and bring customer satisfaction.
5. Information flow
A major function of logistics management is to manage the flow of information between departments and stakeholders. Information can be in relation to many aspects – data, updates, documents, customer details, customs, payments, etc. For efficiency, it’s integral to ensure that the right information is shared with the right people in time and through the preferred channel of communication. For instance:
- Package status tracking data should be shared with customers via notifications and/or alert messages
- Information on new policies or procedures for logistics compliance and taxation (e.g., impact of GST on logistics) should be shared with finance and legal team through internal emails, policy manuals and business update documents
- Inventory data should be made available to customers and inventory teams for order placement and processing though relevant software (i.e., during online order placement, customers should know if the required quantity is available or not)
Managing information flow and control allows logistics companies to take a data-driven and customer-focused approach to business. Analysing data enables them to identify trends, forecast demand, and make strategic decisions for the short and long term.
6. Order processing
At the core of functions of logistics lies order processing or order fulfilment. This task singularly encompasses efficiency across multiple logistics operations – from managing stock and inventory, to order picking at the warehouse, packaging, transportation and delivery.
But order processing is not without its challenges. Efficiency in logistics management requires forecasting these challenging and preparing a gameplan to resolve them. Some common challenges are:
- Incomplete order filling – This is a common challenge that refers to incomplete or inaccurate details filled in during placing the order. This naturally results in customer disappointment, delays and returns, and businesses are taking calculated steps to reduce the inconvenience. For instance, when the customer provides their office address for delivery, the software reads the tag as ‘Office’ and updates it delivery day and time, i.e., between 9 am and 6 pm, through Monday-Friday. This reduces the risk of non-delivery, returns, and lost packages.
- Incorrect packaging – This can occur in multiple scenarios. For example, the customer has provided special packaging instructions (e.g., gift wrapping), or the package is marked as ‘fragile’ requiring layered packaging with bubble wraps, or the parcel is of a specific type (e.g., printed material logistics for the printing industry such as magazines, periodicals, newspapers etc. that requires special packaging to keep it from damage, wear and tear). In all these cases, incorrect packaging methods will only result in losses, poor reputation, returns and loss of customers.
In brief, order processing is the key function that enables business to stay competitive. It brings efficiency in logistics flow and helps to deliver customer happiness.
Logistics functions in SCM
Efficiency in operations is one of the easiest ways for logistics companies to improve customer service. All major functions of logistics management play a pivotal role in how businesses run. Irrespective of the size of the organisation, logistics services are required by all. As such, when one function operates well, its impact is felt across the entire process.
Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.
