Logistics is the process of transporting goods and services from the point of manufacture to the point of consumption. Obtaining raw materials and equipment required for manufacturing is also a part of logistics and supply chain management. This process is a huge operation involving trucks, storage facilities, and distribution centers. Planning and managing these logistics processes is called logistics management.
Logistics management activities typically include:
- Transportation management
- Order processing
- Material handling
- Inventory control
- Warehouse management
- Logistics network design
- Fleet management
- Supply/demand planning
There are several functions and activities involved in logistics management. The primary elements of logistics management are inbound and outbound logistics.
• Inbound logistics means transporting raw materials from the supplier to the warehouse of the manufacturing plant. Inbound logistics moves items including raw materials, tools, components, equipment and supplies.
• Outbound logistics is the process of moving finished products from the point of manufacture and shipping them to customers.
To understand these concepts better, let us consider a logistics example. Inbound logistics traffic for a computer manufacturer would mean sourcing mother boards, wires, processors, plastic, copper, etc., to the manufacturing facility. Outbound logistics is transporting finished computer systems to the retail units. Both these processes need careful planning and communication to meet production and delivery deadlines.
Importance of logistics management
Logistics management is employed to ship products safely adhering to timelines. In this age of same day and next day deliveries, fast and efficient logistics have become the norm of the day. To achieve such fast timelines, logistics operations have really stepped up to the task by establishing more distribution centers along with trying out faster delivery methods like Partial Truckload (PTL) shipping and Less than Truckload (LTL) shipping.
All these new shipping methods create a need for effective logistics management to ensure a free flow of communication between all points in the logistics operation along with real-time updates of goods being transported. The best logistics management practices lead to cost savings for the company and improved customer satisfaction. Here are the top benefits of logistics management:
- Real-time visibility
- Better inventory control
- Reduced operational costs
- Improved customer satisfaction
- Assured safety of products in transit
Note: It is important to point out that supply chain and logistics management are different from each other. While supply chain is a comprehensive function that manages activities such as planning, procurement, sourcing, storage and delivery, logistics management focuses on the efficient transportation of goods.
Functions of logistics management
Logistics management includes several functions to ensure the safe and timely flow of goods from source to destination. Let us dive into the functions of logistics management in detail:
All logistics activities begin with processing the orders that a company has received. First the order will be analyzed to verify if the payment has been made and the delivery timeline is noted down. Order processing includes order placement, picking inventory, sorting, packing, and shipping. Optimizing these activities is the first step in logistics management.
Material handling is the process of moving the goods around the warehouse. Efficiently organized inventory helps in fulfilling orders quickly and accurately. Imagine an e-Commerce company shipping thousands of different products which are stored in a warehouse. When an order comes in, they will have to search for the product from the pile of products in the warehouse. This task is easier when everything is organized with products belonging to the same category is shelved together and marked.
Warehousing is storing finished goods until they reach the point of consumption. Warehouses must be at a convenient location that can process orders and dispatch products quickly. Usually, large companies have distribution centers and warehouses located closer to the point of distribution so it can reach customers faster. Warehousing functions can be handled by warehousing software that can give you real-time visibility into all warehousing functions. Many small businesses use third-party logistics and warehousing services to save time, cost, and keep the process efficient.
Inventory level is evaluated after analyzing the demand for a product. To balance the inventory demand and manage inventory expenses it is important to have a close to accurate forecast on product demand. This helps inventory costs and supply to consumers remain at a constant level. There are inventory management software available in the market that can help you forecast demand and plan your inventory accordingly.
Logistical packaging should ensure that the products are safe and enclosed in a sturdy container. Placing products into suitable packages adhering to safety and customs regulations is necessary to improve logistics functions. Sturdy packages are important for damage prevention, material handling, and storage space optimization. Logistical packaging should eliminate the breakage or spillage of the goods allowing for smooth material handling.
Transportation is the most important function of logistics management. There would be no point in making quality products if you don’t have a transportation method in place that can move your products safely and in time to your customers. This is one of the most resource-intensive and revenue-generating segments for logistics companies. It is also expensive as heavy fuel usage is involved. This is why many companies have shifted to LTL and PTL shipping methods.
LTL services are for transporting small quantity shipments frequently. LTL service providers combine different orders from different companies on a single truck. This helps companies significantly reduce logistics costs. PTL services is another low-cost logistics service often chosen by small businesses when the shipment only needs a part of the truck. Logistics aggregator platforms like nexLogistics provide PTL services offered by the best logistics companies to suit your business needs.
These are the important components of logistics management that are taken into consideration while creating a logistics management strategy. Your ability to ship your products within the deadline will depend on the efficiency of your logistics management strategy.
Logistics management software
To improve supply chain administration and logistics operations companies now employ logistics software. This software increases the operational fluency of logistics activities. It can provide timely and accurate logistics information to help bring down expenses and enhance customer service. There are several advantages that a logistics management system provides:
- Logistics analytics
- Order management
- Inventory management
- Warehouse management
- Transport management
- End- to-end visibility into all supply chain operations
Logistics management is now conducted using logistics software. The use of technology in the Indian logistics sector is at an all-time high, including the use of software to manage transportation, warehousing, order status tracking and more.
This not only allows the supplier to have end- to-end visibility but it also lets the companies pass on a tracking link to customers so that they can monitor their orders once they are dispatched from the manufacturing facility.