Logistics involves the procurement, movement and storage of materials, parts and finished products. When done correctly, logistics lowers costs, improves inventory management, reduces waste and helps fulfill customer orders on time.
For example, a manufacturer might rely on a just-in-time inventory system that aligns raw material receipt with production schedules so that little storage space is required. This allows a company to continually free up its capital for reinvestment.
Supply chain management
While supply chains are vital to global commerce, they can also be fragile and susceptible to unforeseen events. This is especially true when organizations outsource raw material procurement and distribution to logistics service providers. These providers may also handle shipping, inventory and warehousing functions, making them integral to the overall supply chain network.
Generally, the supply chain management process begins with customer sales orders that require products to be manufactured. These sales orders will trigger the planning department to create a production plan and purchase raw materials needed for the order. This information will then be transferred to the warehousing management component, which manages the day-to-day warehouse operations.
Warehousing management involves creating efficient unitization methods to make items easier to move, store and organize. This process will help to streamline inventory, reduce manpower cost and ensure on-time delivery of goods to customers. It is also important to properly package items for shipment, which can improve the cost effectiveness of shipping and increase customer satisfaction.
Inventory management
Inventory management is the process of controlling and analyzing the flow of materials and products in a logistics network. This includes purchasing raw materials, storing them in warehouses and distribution centers, and shipping them to customers. Having efficient processes in place helps you reduce operational costs and improve customer satisfaction. Streamlining the inventory management process allows you to make accurate decisions and increase profitability.
Inventory tracking is also important to ensure that you have enough stock to meet demand. If you’re not able to track your inventory, you may oversell or miss orders. Using first-in, first-out (FIFO) methods can help you keep your inventory fresh and reduce storage and transportation costs.
Managing your inventory effectively requires best practices, technology solutions and tools that can accurately reflect the status of your inventory. For example, a low-cost CMMS solution can integrate your work order reporting, making it more visible to the team members who need it. In addition, it can help you avoid costly inventory write-offs.
Warehouse management
Warehouse management is a key part of the logistics supply chain. It manages the processes that keep products moving in and out of warehouses, including receiving items, storing them and tracking inventory. It also involves shipping and delivering items to customers.
A good warehouse management solution includes tools for managing and optimizing both automated and manual processes. It can help reduce labor costs, improve visibility, increase productivity and reduce inventory errors. It can also lower property costs, and optimize storage space by analyzing customer patterns to determine the best location for items.
It is important to have a flexible and resilient warehouse management system to ensure that you can deliver orders on time. Whether because of bad weather, a faulty shipment or another issue, it is important to be able to change your logistics plans on the fly and adapt accordingly. This will help you reduce the number of return orders and improve customer satisfaction.
Transportation management
Transportation management in logistics includes the planning of how to get goods and materials from suppliers to customers. This includes optimizing routes, selecting carriers and managing freight billing. It also involves arranging storage and handling for shipments. Transportation management is a part of the supply chain and is critical to your business’s success.
Transportation KPIs can be tracked to monitor performance and identify improvement opportunities. They can help you increase efficiencies, cut costs, and improve customer satisfaction. This is especially important for businesses that are heavily dependent on transportation to move goods.
New technology is improving the efficiency of transportation operations. It can automatically create and optimize route plans, allocate transports, and communicate up-to-date ETAs to drivers and planners. This can save time and money, reduce fuel consumption, and speed up the laying of optimal routes. It can even help you manage your inventory by providing visibility of all orders with their respective transports. Moreover, it can streamline the freight audit process and simplify freight settlement.
