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Logistics is an important business function, especially since the rise of the eCommerce business model. The efficiency of logistics function directly impacts business profits in today’s era when doorstep deliveries define customer experience. In this scenario, it is important to manage logistics operations efficiently.
However, before we speak of efficiencies, are you aware of what all activities come under the purview of logistics operations?
What are logistics operations?
Logistics operations are an important part of a supply chain and include activities like – inbound and outbound movements of goods and products, shipping, and storing/warehousing. It also includes reverse logistics operations, wherein goods are returned to the manufacturer for various reason. Moreover, it also includes packaging for protecting products in transit.
Why is it important to bring efficiency in managing logistics operations? Logistics is not only an important function but also a costly affair for any business in India. According to Invest India, the cost of logistics in India is about 13-14%, which is significant when compared to the global average. Therefore, it is essential to manage logistics operations well otherwise, it may result in increased costs and have an impact on profit margins.
How to manage logistics operations effectively?
In order to manage logistics operations effectively, one needs to pay careful attention to the following activities.
- Determine goals: First, you need to determine the logistics goals for your business. Accordingly, self-assess your current logistics operations and analyse processes. Understand the importance of each step. If a process is unnecessary or redundant, eliminate it. Moreover, if the volume in your business needs dedicated attention to logistics, appoint a logistics manager, who can run the operation on your behalf. The experience and skills of the logistics manager will help you to eliminate inefficiencies and run the operations effectively.
- Having a 3PL partner: Having a third party logistics (3PL) partner can help you in many ways. Some of the most important benefits include cost reduction and streamlined operations. 3PL companies handle huge volumes of goods movements and hence have cost advantages with their vendors. As a result, it is cheaper yet better to have a 3PL partner. Moreover, they have expertise in handling day-to-day logistics operations as well as unforeseen incidents (such as fire) better.
- Consider new and effective ways: If the volume of goods to be transported is not very high, you can consider alternative efficient options of logistics such as partial truck load (PTL). Tata nexarc’s nexLogistics offers part truck load services at a reasonable cost. You can easily create your order, choose from multiple logistics providers and provide details for pick-up and delivery to book a shipment. In a few steps, you can easily ship your products. It is an easy, hassle-free, and time saving way of handling logistics operations.
- Set key performance indicators: Once you establish logistics operations processes, it is important to review them periodically with key performance indicators (KPI). This will help you to know your strengths and weaknesses. Also, it will help to measure how effective your processes are. This can further indicate areas of improvement, which can be brought about in a timely manner.
- Adopt software solutions: Modern software solutions such as inventory management solutions or warehouse management solutions (WMS) give better visibility over the supply chain and better control. As a result, it helps to manage logistics operations effectively.
Important tips for effective logistics management
Apart from steps mentioned above, there are some simple tips which can help you in improving efficiency of logistics operations.
- Eliminate redundant processes: Remember that more the processes, the more chances of inefficiencies. Therefore, emphasise on eliminating redundant, mundane manual processes. That will save effort and time too.
- Automation plays a key role: Logistics involves many processes that can easily be automated depending on the need of the business. For example, the use of automated guided vehicles (AGV) or automated forklifts for material handling in manufacturing or warehousing, etc. can help you in many ways.
- Embrace digitalisation: Digitalisation is the way forward. System upgrades like software solutions can offer real time tracking. It helps you to analyse the causes of delays and eliminate them.
- Data and analytics: Analysis of data collected by software tools on logistics function can help you further improve logistics operations.
- Communication is the key: In logistics operations communication and keeping your customers informed. Adopt a logistics system that allows information regarding shipment along with the tracking id/number to be shared with the customers. Such transparency allows to build trust.
- Customer satisfaction: Ultimately, everything comes to customer satisfaction as a happy customer will give you more business. Timely doorstep deliveries can make customers happy. Make sure that your logistics operations offer timely deliveries to customers.
- Be prepared for unforeseen incidents: Logistics is essentially moving and transporting goods. Delays, damages, and other unforeseen incidents like accidents may happen. As a result, you need to have a contingency plan in place.
- Sustainable packaging: Going green is a buzzword now. Since many customers prefer greener business practices, the use of sustainable or green packaging materials can improve customer satisfaction.
- Keep a check on what competitors are doing: Keeping an eye on competitors doing is important. Having information competitors’ practices can help you understand where your logistics operations stand. You can improve logistics operations accordingly to improve customer experience.
Not all steps of improving efficiency are suitable for all businesses. Depending on your business size and requirements, you can choose what suits you the best. Streamlining and modernising your logistics operations is necessary. Improvement in logistics management can help you optimise supply chain management too. Hence, it is essential to implement various ways to improve the efficiency of logistics operations.