The role of efficient logistics management cannot be denied in running a business successfully. Regardless of a business’ industry, specialization, or age, its primary function is to take its goods and services to the buyers. This coordination of goods and services movement from one place to another makes up the backbone of logistics. And therefore, it is essential to master logistics management.
What is Logistics Management?
Logistics essentially means the complete distribution and control of inventory, from its procurement and manufacturing to the point of consumption. In simple words, the flow of initial production and procurement of products to its final consumption state, typically in the hands of consumers, is business logistics.
The term involves multiple processes. Therefore, its implementation focuses on making multiple steps for making end-to-end inventory management efficient and cost-efficient.
Logistics can be either managed entirely in-house or outsourced to a third-party logistics partner. Depending on the business’s nature, functions, and size, a 3PL provider can be a better option than managing the entire business logistics in-house.
The Role of Logistics for a Business
Efficient logistics management makes a business more profitable. Managing logistics well helps gain broader visibility in the movement of products from the point of manufacture to the point of consumption. While managing logistics efficiently helps create a fresh set of strategies with improved internal operations, you can also understand the aspects you can handle well and the ones that require updated systems.
We can break the functions of logistics in the supply chain management into the following:
- Sourcing Raw Material: procuring raw material and distributing it into smaller and individual components to make a finished product.
- Product Transportation: the actual movement of goods starts from here – distributing it between locations by arranging the inbound and outbound transportation. It can be done in-house or with the help of 3PL service providers.
- Order Fulfillment: the management and delivery of orders from the point when a customer places an order to its delivery make the entire order fulfillment process. You can take the help of software for the efficient process.
- Warehouse: the goods are stored in a warehousing unit until an order is received against them. The warehouse processes include storing inventory, managing it, preparing it for shipment, and managing returns.
Importance of Effective Logistics
Promotes Business Results
If logistics is outsourced to a third-party logistics solution, it reduces the overall load on you. Thus, you can leave behind inefficient processes. Besides, a 3PL comes with smart and practical ideas and processes that can increase your overall supply chain productivity.
While deciding on a strategy, keeping the customers’ changing needs in the account is essential. A good and efficient logistics strategy is also required to keep store locations and transportation operations in hand. This will help you come up with a strong strategy. The following should be incorporated into your logistics plan:
- Evaluate your logistics operations at regular intervals.
- If there are changes in the supply chain, always keep those updated with up-to-date information those who directly deal with or are impacted by changes.
- Revise your plan regularly and adapt to new strategies with changing times.
Better Experience for Customers
Happy and satisfied customers can become your most valuable asset. They play a vital role in all three phases of the supply chain – product, marketing, and logistics. Therefore, you must understand your customers and their needs, preferences, and desires. You can work accordingly to meet their needs and take your business to the next level.
When it comes to buying online, the following factors are essential for the consumers:
- Plethora of buying options
- Convenience of browsing
- Secure payment options
- Competitive prices
- Good logistics solution – timely and secured order delivery
Additionally, the customers need to have a quick and straightforward buying and checkout process. They want to look at all options faster, place an order quickly, have secure and different payment options, including the COD option, and get their product faster in no time. Besides, they also want clear communications regarding where the product is and when it is likely to be delivered.
When you fall short of these customers’ expectations, you are more likely to get into trouble. An efficient business logistics guarantee that you don’t ever fall here.
Cost Reduction & Process Efficiency
With logistics management and maintained inventory levels, you can reduce storage space, thus the spendings on it. You can also reduce shipping costs as you can store inventory closer to your buyers. Many businesses also save by getting into agreements with 3PL service providers that offer storage, transportation, and fulfillment services.
By outsourcing your fulfillment operations, you can significantly increase the total business efficiency. By allowing these partners to handle fulfillment operations, you can work towards building a stronger brand.
