Supply chain logistics is a critical component of the supply chain. Proper logistics management helps improve the efficiency of your product movement. It also helps ensure you meet the expectations of customers. When customers are satisfied, you can expect a boost in your business value and reputation.
But what exactly do we mean by logistics management.? How does it differ from supply chain management? Perhaps more importantly, how can you ensure effective logistics management as a business? We’ll answer all those questions in this article.
What Is Supply Chain Logistics?
Contrary to popular perception, supply chain logistics is not the supply chain. According to Investopedia, a supply chain covers all processes required to get the product or service to the customer. That covers production, product development and even information processes.
Supply chain logistics, on the other hand, refers to the transport and storage of products from the point of origin to the point of consumption. It involves processes such as product transportation, distribution, warehousing and delivery.
In other words, supply chain logistics is just one of the many parts of the supply chain.
Source: Researchgate
Don’t get me wrong. It is an important part. Consider the statistics. According to Convey, a whopping 98.1% of shoppers say delivery is likely to impact their brand loyalty. Besides, since logistics is part of that bigger system, any logistical issues will have a negative effect on the supply chain as a whole.
The goal of efficient supply chain management is to ensure the business remains competitive in the industry. For that to happen, effective supply chain logistics management should achieve its goal, too: to help the business meet customer requirements and ensure a good customer experience.
But that’s not all there is to it. The other processes involved in the supply chain–procurement and manufacturing, product development, customer service, performance measurement, and information sharing–should run as seamlessly as well.
Benefits of Effective Supply Chain Logistics Management
I’ve mentioned two benefits of effective supply chain logistics management: efficiency of product movement and enhanced customer satisfaction that leads to improved business reputation.
Those, however, are not the only benefits when you manage your logistics operations well. You can reap the following benefits, too:
- Enhanced brand visibility: Since proper logistics management ensures products are delivered to the customer in a timely manner, it follows it helps enhance brand visibility, too. Businesses that don’t meet customer expectations when it comes to product delivery, after all, are not likely to stay top of mind with customers.
- Reduced overhead costs: Effective logistics management can help improve cash flows and net profit, among others, as you reduce storage costs while allocating your resources to more efficient shipping schedules, methods, among other things.
- A stronger organizational structure: Proper logistics management enhances collaboration and encourages more fluid communication among departments.
The bottom line is, the proper logistics management can give you the marketing, operational, financial and structural benefits to succeed as a company.
Key Things to Consider for Effective Logistics Management
You have several options to secure effective logistics management for your business. Either you set up everything on your own or look for third-party logistics partners or 3PLs. Regardless of the option you choose, though, here are the four components you need to consider:
Space: Consider the distance of the storage facility to transportation and distribution centers. Also, does the warehouse adhere to industry storage standards. Is there regulatory compliance? Look at the facility size and capacity, too.
Employees: There should be skilled staff handling the logistics from end to end. An experienced manager or team of experienced managers should oversee the staff to ensure seamless logistics operations.
IT tools: The staff should have the tools necessary for storage visibility and complete delivery. Is there an inventory management system? How about tools for freight tracking and delivery schedules? There should be IT infrastructure in place to ensure the system is protected from cyberattacks.
Equipment: Is there inbound storage equipment? How about outbound equipment and stations for packaging, labelling, and shipping? Is there warehousing floor equipment such as conveyor belts, forklifts, among others?
There are other things you need to consider, too. For example, how is the chain of command among employees? Do communication processes run smoothly? Also, is there a system to compile data to assess the overall impact of product movement?
Because there are so many factors to take into account and logistical processes can be very complex, many businesses save themselves the trouble and engage the services of 3PLs that can handle that aspect of their supply chain instead.
Why Opt for 3PLs
According to Shipbob, an astounding 90% of Fortune 500 companies use a 3PL. That’s not surprising. Just look at the benefits outsourcing your supply chain logistics operations and management can bring you:
- You can count on personnel expertise: Personnel of 3PLs are veterans in their field. That means you can expect less logistical mishaps and on-premise accidents.
- You can reduce costs: 3PLs use simplified operational workflows that are efficient. Since you can expect more efficient logistics operations, you can cut down on field operation costs, storage costs, among others, as a result. This leads to more overhead savings for you. Besides, when you engage the services of a third party, you wouldn’t have to pay for all that inbound storage equipment and outbound equipment. The 3PL would already have those.
- You can focus on other important aspects of your business: Since a third party takes care of your logistics operations and management, you can concentrate on other aspects of your supply chain, such as manufacturing. When your business manufactures more products, the lower the overall per unit fixed costs. We go back to that benefit of reduced costs.
- You have less work to do: Who doesn’t want to have less things to worry about?
A good 3PL can help you achieve your logistics goal of delivering your products on time. It’s certainly the experience we’ve had as one of the leading aerospace supply chain companies.
In Closing
Supply chain logistics refers to the transport and storage of products from the point of origin to the point of consumption. It is an important part of your supply chain. When there are logistical issues, your supply chain will be negatively affected.
That’s why you need to pay attention to your supply chain logistics management. If you manage your logistics operations well, you can reap all sorts of benefits, ranging from enhanced brand visibility, reduced overhead costs, to a stronger organizational structure. You can ensure customer satisfaction and a good brand reputation, too.
But logistics management requires that you consider multiple factors and deal with complex logistical processes. That can be overwhelming. This is where a third-party logistics partner can help you.
So, vet potential partners and pick the one that meets your requirements. With the right 3PL, you’ll see how your logistics operations will go smoothly. The result? You won’t be the only one going home satisfied. Your customers will be, too.
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