Introduction to logistic management
Logistics management is a supply chain management component that is used to meet customer demands through the planning, control and implementation of the effective movement and storage of related information, goods and services from origin to destination. Logistics management helps companies reduce expenses and enhance customer service.
The logistics management process begins with raw material accumulation to the final stage of delivering goods to the destination.
By adhering to customer needs and industry standards, logistics management facilitates process strategy, planning and implementation.
Logistics management involves numerous elements, including:
In logistics management, unwise decisions create multiple issues. For example, deliveries that fail or are delayed lead to buyer dissatisfaction. Damage of goods due to careless transportation is another potential issue. Poor logistics planning gradually increases expenses, and issues may arise from the implementation of ineffective logistics software. Most of these problems occur due to improper decisions related to outsourcing, such as selecting the wrong vendor or carrying out delivery tasks without sufficient resources.
To resolve these issues, organizations should implement best logistic management practices. Companies should focus on collaboration rather than competition. Good collaboration among transportation providers, buyers and vendors helps reduce expenses. An efficient and safe transportation provider is also vital to business success.
Importance of logistics management
Effective logistics management is important to companies for a number of reasons, both positive and negative.
Good logistics management ensures that products are shipped in the most economical, safe, efficient and timely manner. This results in cost savings for the company and more satisfied customers.
In contrast, poor logistics management can result in damaged or delayed shipments, which can then lead to dissatisfied customers, returns and scrapped products. The consequences of these problems include higher costs and customer relation problems. In order to avoid these results, effective logistics management includes careful planning, proper software system selection, proper vetting and selection of outsourced vendors, and adequate resources to handle the processes.
Logistics management functions
To varying degrees, logistics management functions include customer service, sourcing and procurement, production planning and scheduling, packaging, and assembly. Logistics management is part of all the levels of planning and execution, including strategic, operational and tactical.
Further, it coordinates all the logistics activities, and it integrates logistics activities with other functions, including marketing, sales, manufacturing, finance and information technology.
Logistics management process
Logistics management generally consists of processes for inbound and outbound logistics traffic. Inbound logistics is the process of moving goods from suppliers into a warehouse, then into a production facility to make products. Inbound logistics can include raw materials, tools, component parts, office equipment and supplies. Outbound logistics is the process of moving finished products out of warehouse inventory and shipping them to customers.
Here are some examples: For a computer manufacturer, inbound logistics might involve electronics parts, computer chips, cables, connectors, moulded casings and shipping cartons. Outbound logistics involves the finished computer and associated peripheral devices. Meanwhile, for a furniture manufacturer, inbound logistics could involve wood, glue, fabrics, screws, nails, paint and safety glasses, while outbound logistics would involve the finished furniture.
Inbound Logistics is more related to Material Management and Procurement where the incoming delivery of raw materials and spare parts, from the suppliers to the manufacturing plant is called inbound logistics. It focuses on the movement of raw materials within and to the manufacturing plant. The interaction involves a supplier or vendor and the firm.
In easy terms, Inbound Logistics is the primary activity, which focuses on purchasing and scheduling the inflow of materials, machines and final goods, from suppliers to the production unit, warehouse or retail store.
Inbound logistics includes all those activities, which are necessary to make the goods available for operational processes, at the time of their requirement. It includes materials handling, transport, stock control, and inspection etc. to facilitate, the production or market distribution.
Initiates with sourcing the list of items needed for the manufacturing plant then a purchase order is created against those items for a choice of the vendor. Once the selection of supplier, negotiation on price and the delivery date is fixed; the next step is to progress with the transportation of those items to the local warehouse and collect them.
Outbound Logistics is related to Customer Service and Distribution Channels. The outward movement of final or finished goods, from the company to the end user, is known as Outbound Logistics. It concentrates on the transportation of finished goods or product from the company to the final consumer. The interaction is usually between the firm and the customers.
Unlike Inbound Logistics that fundamentally focuses on purchasing and directing the inbound movement of products, parts, materials and finished inventory from suppliers to warehouses or manufacturing plants, Outbound Logistics is a whole other separate set of processes. This part of logistics relies profoundly on transportation and storage of finished goods. Typically, it is centred on two concepts, that is, warehousing and transportation.
The finished products are stored in the warehouse and on the receiving of customer order or delivery order dispatch process is initiated. Then the transportation selection is made based on the volume of the goods, urgency, and the location the delivery is made to the end user.
The logistics industry has evolved to such an extent that a countries economy today is majorly based on its performances. Companies, therefore, are very much engaged in implementing the best tools possible that offers a range of capabilities for its success.
It’s imperative to mention that for any logistics or supply chain management company who are operationally involved in the planning, procurement and distribution require a highly robust and functional management tool.
Several companies are focusing more on logistics management software or freight forwarding software to maximize customer value and thereby drive competitive advantages. Some of the tools provide the much-required support for goods transportation, inventory, warehousing, and a robust logistics network design that helps in linking the flow of goods, information and perfect control over finances.
Let’s say your organization may be interested in developing an in-house software solution or even the easiest being to procure one, there are certain features which are a pre-requisite for optimum results.