Logistics management is a detailed process of organizing and implementing a particular operation. When it comes to a business, the process of logistics management refers to the workflow from start to finish. It’s used to fulfill the needs and expectations of both customers and the organization itself. Another way of looking at it is to consider logistics as a way of having the right item in the right quantity at the right time and place for the right price and condition and for the right customer.
Logistics management is a supply chain management component that’s used to administer your resources to integrate the flow of information, planning, and control and implement the effective movement and storage of goods and services from their point of origin to their final destination. The process begins with raw material accumulation to the final stage of delivering goods to the end-user. By keeping in line with all customer needs and other industry standards, logistics management will facilitate process strategy, planning, and implementation.
There are several elements that go into effective logistics management, such as selecting vendors who are able to provide transportation facilities, the most effective transportation routes, the most efficient delivery and warehousing method, as well as the use of IT resources able to handle and coordinate these interrelated processes.
The Importance of Logistics Management
When it comes to logistics management, it’s important to keep in mind that any wrong decision can lead to a multitude of additional problems. If, for instance, your deliveries fail or are delayed for some reason, this will often lead to customer dissatisfaction. Careless transportation can result in damaged or stolen goods, which will have even worse consequences. In other words, poor planning will lead to increased expenses and the loss of business opportunities down the line.
To solve these logistical issues, businesses need to implement the best logistics management practices that will fit their specific needs. While a bit of competition is always good, trucking companies should focus their efforts on collaborating with their vendors, logistics providers, and buyers to reduce expenses. Since logistics management’s main purpose is to find the most effective way of moving goods from conception to completion, doing so requires the involvement and cooperation of all parties involved.
The driving force behind all of these actions is to meet customer demand and provide the best possible services able to capture and retain consumers. It should also go without saying that with increasing customer demand, there will also be a need for faster shipping, accurate deliveries, and high-quality last-mile delivery services.
Another main benefit that logistics management offers an organization is in regard to the level of visibility and transparency it brings to the entire supply chain. By analyzing historical data and tracking the movement of goods in real-time, businesses and logistics managers can better understand, predict, and optimize the flow of goods in an attempt to avoid any potential disruptions down the line.
To summarize, logistics management helps businesses by:
- Increasing Customer Satisfaction – Good logistics management strategies should always be aimed at constantly optimizing the warehousing and transportation processes, as well as eliminating any disruptions that it encounters. As such, it will have a direct impact on customer satisfaction, which will also bring with it an improved reputation to the company’s brand and generate more business opportunities. The smoother the freight moving process is, the more value you will bring to your clients, and the better their experience will be.
- More Insight and Visibility -Having visibility in the supply chain is of the utmost importance as it allows you to make better and more informed decisions about your logistics management strategy. To be able to analyze past information and track goods, you will need to use transportation management systems (TMS). With these advanced analytics capabilities, businesses can keep their supply chain moving effectively while also gaining valuable operational insight.
- Cost Savings – Managing logistics effectively will also give the company better control over their inbound freight management, inventory, and reverse logistics. All of these will cut logistics costs by a significant margin.
What Are the Goals of Logistics Management?
As mentioned previously, logistics management is a subset of the larger supply chain management. It’s also important to mention that logistics management works across all industries with the aim of bringing project life cycles to fruition. When it comes to logistics management in business, the focus is twofold. On the one hand, it tackles inbound logistics where it handles internal functions. On the other hand, outbound logistics focuses on the external follow of products from the point of origin to the point of consumption.
Logistics professionals focus on purchasing, inventory management, warehousing, transportation, consultation, and the mapping of all of these supply chain processes. In more general terms, however, the purpose of logistics management is to increase overall revenue, improve the operational cost structure, reduce transportation costs, and improve customer experience.
The Four Different Types of Logistics Management
To better understand and implement logistics management, the process can be broken up into four distinct parts that address different aspects of the whole supply process. These are as follows:
- Supply Management and Logistics – This side of logistics management is about planning, procuring, and coordinating raw materials used during the production of a task or product. This includes both the transportation and warehousing of these materials. In addition, it evaluates the supply level at different stages of the process to ensure that customer needs and expectations are met. For example, supply management and logistics ensure the delivery of parts to a manufacturing plant or materials to a construction site.
- Material Distribution – This part of the logistics management concerns itself with taking stored materials and transporting them to where they need to go. The main issues here include loading, unloading, transportation, and keeping track of stock. This type of management will control the movement of materials and supplies from a central warehouse to the retail stores that sell the items to end-users.
- Production Logistics and Management – This type of logistics management falls under product management and is about managing the stages that go into combining distributed supplies into a product such as staging of materials at the correct time to correspond with the construction of the product.
- Reverse Logistics – This is about the management of product returns. It can refer to the return of unused or unwanted products from end consumers. It can also refer to the removal of excess material from a construction site and bringing it back into stock.
How to Implement a Winning Logistics Strategy
There are several key elements that you need to take into consideration when implementing a successful logistics management plan. For starters, it’s important to know that there is no one-size-fits-all approach. Every organization will need to assess its current situation and, with a bit of trial-and-error, determine which elements will best fit their requirements. Some of the most commonly used factors include automation and great coordination between partners and departments. But as we previously stated, some degree of improvisation is always welcome.
That said, here are some key elements you will need to implement in a successful and effective logistics strategy.
It should go without saying that for almost anything to be successful, a healthy dose of planning and due diligence will need to go into it. When it comes to logistics management, planning will need to cover elements such as the procurement of goods, storage, and product delivery to its destination. Apart from these core elements, logistics managers will also need to take into account other variables, such as time, transportation, and costs.
Supply chain operatives will need to devise a flow chart that depicts the entire operation as a means of attaining the maximum value and work from the least possible amount of time. At the same time, planning should also take into consideration the profit and cost factor. Unforeseen circumstances shouldn’t be neglected either and should be considered for areas pertaining to the products, transportation availability, any internal issues, and choosing the right freight classes. For everything to run smoothly, a comprehensive contingency plan also needs to be put in place.
● Implementing Automation
Logistics technology and automation play a critical role in increasing the efficiency and process optimization of any organization. In fact, automated warehouse systems will help businesses use up to 40% less warehouse space. By making use of a warehouse management system (WMS), you will have complete digital control over your inventory, which gives you a bird’s eye view of all goods that come in and out of the warehouse and the supply chain as a whole.
It’s also good to keep in mind that such a system will ensure that items will be picked, packed, and shipped correctly every time, which lowers the incidence of replacement orders and returns. It also means fewer inventory checks, as well as lower logistics and supply chain costs. Automated systems can save you considerable amounts of time by eliminating much of the manual grunt work, while the accurate tracking that it provides will improve the overall process management.
● Investing in Key Staff Members
Your logistics teams are an essential part of the organization, and they are the main element responsible for its growth and success. To that end, every key role within the supply chain should be filled by highly-skilled people who are perfect for that respective field of work. You will need to consider investing in the proper training of employees with regular training workshops to keep them updated with the latest trends in the logistics industry. It’s a pretty well-known fact that regular training helps improve employee morale and productivity. This will also translate to greater customer satisfaction and increased profits over the mid- and long-term.
Pay close attention to your logistics managers and their interpersonal skills. In the event of an unforeseen circumstance, you will need someone that keeps a cool head and finds the best management solution to address the problem at a moment’s notice. In addition, they should also have authoritative contacts in the industry, as this can be beneficial in tapping into new business opportunities.
● Warehouse Management
Without proper warehouse management, no logistics management strategy can ever be complete. It’s important to keep in mind that these types of operations are almost completely dependent on the types of goods they work with. Dairy products and other types of perishable goods, for example, will require refrigeration facilities. Grains, on the other hand, will need a moisture-free environment. In other words, the exact specifications of a warehouse will depend in large part on the type of products it handles. It should go without saying that the logistics company operating that warehouse will have to aim at developing its inventory in such a way to minimize the wastage of goods.
Maximizing the storage capacity also needs to be given some considerable attention. The use of taller storage units will allow businesses to make better use of the available space without needing to expand the warehouse and incur additional operating costs. The use of a WMS will also be beneficial, as it will help locate products much more easily and quickly than otherwise.
● Effective Transportation
Your transportation department will need to be properly analyzed to eliminate any unnecessary expenses that may exist. To do this, you should determine your best delivery routes and the most cost-effective packaging method that requires a small investment while ensuring product safety. To that end, you should optimize your packaging in such a way that it occupies the least amount of space possible without increasing the overall weight of the package.
Another effective strategy of improving your transportation process is to negotiate faster lead times with your suppliers. You can also look for additional suppliers that will be able to meet your replenishment strategy. A faster lead time will provide you with more flexibility when reordering and the possibility to hold less inventory.
● Continuous Monitoring of Customer Demand
Keeping a constant eye on your customer demand is an excellent way of staying on top of things when it comes to your logistics and warehousing plans. In fact, most businesses plan their operations on historical customer demand patterns. They can predict with a fair degree of accuracy when a particular item will see increased demand and when that’s no longer the case. However, it’s not uncommon for many companies to work with outdated demand patterns, which inhibits their ability to make accurate supply chain decisions.
But by regularly monitoring customer demand trends, you will ensure that your previous assumptions are still relevant. If you do see any changes, you will be able to adjust accordingly and order your supplies based on those new trends. It’s a good idea to keep a redundancy stock on hand, just in case your assessments don’t materialize, but you should not stock up for a future demand that has a very small chance of actually panning out.
If you need help with optimizing your logistics management strategy, Redbird Logistic Services is a third party logistics function, supply chain solutions, and logistics management partner that can help you with your logistics plan. If you want to become more efficient and productive, while also lowering your overall warehouse costs and gain a competitive advantage, contact us today!