Logistics is a vital part of supply chain management (SCM), which involves all the processes that take a product from raw materials extraction to consumer purchase and delivery. These include demand planning, purchasing, product assembly, transportation and warehousing.
A successful logistics operation prevents stockouts and backorders, reduces costs by avoiding overproduction, and improves customer service with accurate order fulfillment and timely deliveries. It also provides valuable feedback on consumer demands to help plan production and inventory levels.
Procurement
Procurement logistics involves managing the incoming raw materials that will go into manufacturing the company’s products. It includes product sourcing and selection policies, terms and conditions and communication strategies to keep costs low.
It also includes shipping raw materials to manufacturers, distributors and retailers to keep them stocked with the goods they need to sell to customers. Finally, procurement logistics is responsible for ensuring the right products are available at the right times and handling returns from customers. It’s vital to have the right resources in the right place at the right time. This helps companies avoid waste and maximize profits. This operational goal can be achieved through efficient inventory management.
Inventory Management
Managing your inventory is an important function of logistics. It helps you ensure that there are enough items available to meet demand without incurring high storage costs. This includes setting reorder points and other criteria. It also involves evaluating pricing and determining the most reasonable prices for your products.
It also covers organizational processes like inventory receipt and handling procedures, stock movement documentation and reporting, and kanban systems (a signal system that informs workflow throughout the supply chain). It’s part of what makes up SCM. This is a broad term that encompasses all aspects of your business from product development to customer service.
Warehousing
When companies produce a product, they often ship it to warehouses to be stored until it is sold. Warehouses can be owned by private entities or leased from third parties.
Warehouses can also be used as assembly centers for products shipped in several pieces that need to be assembled by the client upon receipt. This is called reverse logistics.
Efficient warehousing can help businesses keep more supplies on hand. This reduces costs and allows companies to better serve customers with accurate delivery times. It also improves risk management as well by allowing the company to protect inventory from price fluctuations in the market.
Packaging
Packaging is a crucial component of logistics and supply chain management. It protects goods during distribution and transport, showcases quality and helps communicate with customers. Packaging also performs a variety of other functions, including:
It is important to keep track of product flow throughout the supply chain. This can be done using sensors, barcodes, and other technology. It can help prevent production bottlenecks and identify problems in distribution processes. It can also improve inventory accuracy and reduce order errors. It is also essential to maintain visibility throughout the process so that you can quickly correct issues as they arise. This will ensure a smooth and seamless delivery process for your customers.
Transportation
Few functions are as closely tied to customer service as shipping. A company’s reputation and competitive advantages often hinge on the speed, accuracy and cost of its product delivery.
Transportation management is responsible for planning, optimizing and executing the use of trucks, trains, ships and planes to move finished products from warehouses to customers. It also encompasses yard management, which oversees the flow of goods in and out of manufacturing plants, warehouses and distribution centers. Unitization is another important aspect of this function, as it helps make items easier to transport and store. Using kanban can be helpful for this purpose as well.
Customer Service
Customer service is a key component of logistics and supply chain management. It involves communicating with customers, providing status updates and responding to issues. It can also include facilitating product returns or replacing damaged goods.
One of the biggest challenges in logistics customer service is ensuring that products are delivered on time. This is crucial for maintaining a company’s reputation and competitive advantage in the marketplace. Delays or errors in shipping can result in customer dissatisfaction and a negative impact on business.
Other logistical challenges include coordinating with customers and obtaining reliable data to determine the best route for deliveries. Lastly, logisticians must ensure that the correct information is provided to customers on packing slips and shipping labels.
