Great ideas remain beautiful hypotheticals if there isn’t a way to implement them. Think of the idea as the inspiration, and the organization of that idea as the work required to actualize it. But that work isn’t a one-time activity, of course: it’s a process that flows from one task to the next. There are many points along that journey, from the idea to the execution to the customer.
Managing that work process is called logistics management. It considers everything from information to materials, production and more. Without logistics management, the many phases of any product will quickly fall into a chaotic mess. If you’re not familiar with logistics management, don’t panic. Here’s a look at the basics and how to best apply it to your business.
What is Logistics Management?
Logistics management is a supply chain management component that is used to meet customer demands through the planning, implementing and controlling the efficient flow of raw-materials, work-in-progress and finished goods and related information-from point of origin to point of consumption; with a view to providing satisfaction to the customer.
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.
The different categories of logistics are:
- Third Party Logistics (3PL)
- Fourth Party Logistics (4PL)
- Inbound Logistics
- Outbound Logistics
- Reverse Logistics
- Green Logistics
- Construction Logistics
- Digital Logistics
- Military Logistics
The Importance of Logistics
Whether you are a manufacturer or a reseller, you can reach to your customers by marketing techniques or by word of mouth. But, your product can reach them by a proper distribution network.
It depends on the seller whether they want to manage the delivery system by themselves or outsource the logistics to a reliable company to handle their supply chain management.
Many distributors, dealers and retailers depend on logistics for the delivery of products they require. The major responsibility of any logistics is to deliver the right product in the right quantity to the right customer at the right time.
The 7 Rights of Logistics Management
In the supply chain industry, there’s a concept known as the 7 Rights, or 7 Rs, of logistics. These fundamental principles help define and inform your decision-making and methodology on logistics. When these 7 elements work together cohesively, your business is more likely to have an effective logistics process that eliminates waste and saves money.
The 7 Rs are:
Right Product
Any company that provides a service must clearly specify the type of products that it will deal with and which it is ready to transfer, and knowing the product you want to deal in will help you save a lot of time and resources, and even manage it with proper guidance.
Right Customer
The right customer is about finding the customer and creating an awareness about our product and services. The greatest challenge involved in this would be to identify the customer to be targeted. The solution to finding the right customer would be to do a market research.
A market research would give an insight into which we are supposed to target. Then as per the budget one would choose which marketing strategies to employ so that the right people know about our product and how to access the product.
Right Quantity
It is also necessary to submit the right amount of goods in logistics. The supply chain administrators are charged with identifying the right amount of deliverables and working with the production and distribution department to get the best quantity of goods distributed to the customers. All things should be taken proper care of and handled wisely. While packing it must be checked that the quality should be according to the demand. Less quantity will take the customer towards the wrong perception of the company.
Right Condition
In order to be able to maintain the condition of your products or your items well, you need effective storage, as each product is stored with reference to its specifications and placed on the appropriate facilities to maintain its condition and quality, and thus deliver them in a right condition.
Right Place
The demand for your product may vary depending on geography and demography and other factors. It is necessary to understand from doing extensive market research the exact place that needs to be targeted, as certain areas might have demand for the product whereas the other areas might not care about the product at all. After choosing the place it is important to choose a distribution strategy that would satisfy the demand without oversupplying or under-supplying the product at any given point.
Right Time
The right product should be produced at the right time to cater to the demand. If jerseys are manufactured, the right time for them to be on the market is in the winter. If the product doesn’t reach the market prior to winter there won’t be a demand for the jerseys. Hence right time is very critical in Logistics
Right Price
Finally, you need to set the right price on your products or services in order to make a profit and continue to grow your business. A good logistics management system will help you track pricing and expenses over time, as well as record whether or not goods or services were sold at the right price.
Different Types of Logistics Management
There are four main types of logistics management, each emphasizing a different aspect of the supply process.
Following are the major types of logistics-
- Inbound Logistics
- Outbound Logistics
- Reverse Logistics
- Third-Party Logistics (3PL)
There are many more types apart from these also but the most used ones are these four.
Inbound Logistics
Inbound logistics processes include the movement of raw materials, finished goods, and supplies from a manufacturer or other distribution channel to a fulfillment center, warehouse, or retail store depending on the business model.
Outbound Logistics
Outbound logistics processes are related to the movement of end products to the end user, often originating in a distribution or fulfillment center and then delivered to its final destination.
Reverse Logistics
Reverse logistics is a process of transporting product from the end customer to the seller. It includes the collection, inspection, sorting, refurbishing android distribution.
Third-Party Logistics (3PL)
The third-party logistics are focused only on the transportation of products from one end to another end and nothing else.
5 Essential Warehouse Management Processes
Warehouse management is one facet of supply chain management. It affects retail order fulfillment, storage, inventory management, shipping, and distribution. Having an all-in-one solution lets you see what is happening across different functions of the warehouse in real-time such as inventory being received, orders being packed, shipments being labeled, and any other movement of goods.
1. Inventory Tracking
Inventory tracking is all about checking the number of supplies or goods a store has. Keeping track of inventory ensures that there are enough supplies on hand.
Inventory is the primary source of revenue for businesses. Raw materials, finished and unfinished products are all considered inventory. Controlling the inventory means that procedures should be set to exceed goals and prevent theft, loss, damages, etc.
2. Picking and Packing
The preparation of orders and the correct packaging of items for later distribution are key to an optimal supply chain and to the satisfaction of your customers. The term picking refers to all the actions that take place during order preparation, including the organization of the order, the picking route through the warehouse and the removal of those products from stock. In contrast, the term packing encompasses all order preparation tasks: packing, wrapping or packaging of products to facilitate their dispatch and protect the goods against possible damage during the final stage of distribution.
3. Receiving
Any warehousing operation must be able to receive inventory or freight from trucks at loading docks and then stow them away in a storage location. A warehouse management system will need to be able to scan in each new box received with the inventory quantities it has. Then, it will be brought to its short-term or long-term inventory storage location, where it will be scanned again. Warehouse management software should provide clear instructions for each user so they know how to receive, unpack, retrieve, pick, pack, and ship inventory.
4. Shipping
Based on the delivery options and shipping services you offer to customers, shipping carriers like DHL, USPS, FedEx, and UPS will pick up orders from the warehouse to ship packages to their next destination. Once the order ships, your warehouse management system should be able to automatically send ecommerce order tracking information back to your store so your customers can track their shipments.
5. Reporting
Access to accurate and complete freight payment data is vital to the effective management of freight. A considerable amount of data gets generated when FLEX Logistics moves shipments for its customers and audits and pays the resulting freight invoices. This freight payment data becomes the basis for reporting on spend, mode, lane and savings. The flexibility of the FLEX Logistics system makes it easy to provide our customers with custom and standard reporting to drive better future decision-making.
Tips for Smart Logistics Management
Logistics management involves a lot of planning: the more steps, the better. By considering every stage of the product, its distribution and the return of materials and supplies, you’re more likely to increase efficiencies and increase revenues.
The larger the operation, the more complex and difficult the logistics management. Therefore, the more you need a strong logistics management plan. In order to be prepared and have the best plan possible, the following are some tips to follow.
- Have a Strong Plan
The first step to accomplishing a task is planning. Now, planning encapsulates various factors. It involves procuring the goods, storage facilities, and delivery of products to the exact location. Apart from these, the other parameters are – time, transportation, and costs. A supply chain operative should be able to devise the flow chart for the whole operation. The purpose of planning is to attain maximum work in the least possible time. At the same time, the planning should aim at maximizing the profits.
- Make a Plan B
No matter how fool proof you think your logistics plan is, it’s impossible to prepare for every possible eventuality. A good logistics manager therefore knows their job is far from done after their plan has been made, as they need to follow the supply chain at every point and put out fires whenever they crop up. To do this effectively, you should have contingencies for every element of your logistics plan. You should also know when to stick it out with your original plan and when to switch to your backup — something that can only come with experience.
- Hire a 3PL
When your logistics plans go awry, it’s crucial that the person tasked with sorting out the mess has great interpersonal skills. This is because they will not only have to re-arrange things with the employees within your business, potentially making life more awkward for them, but also occasionally have to find a last-minute logistics supplier to fill in.
If your logistics manager is good with people and has a solid network of industry contacts, they will be well-equipped to get your business out of any logistics problems. Whether someone within your business fits this profile or you need to look outside of the company, finding the right person for this position is a part of effective logistics management.
- Automate
In the age of automation, technology plays a major role in increasing the efficiency of an organization. Automation has a vital role in business process optimization. There is valuable software that can be deployed in the logistics process. This saves a considerable amount of time because manual interference is eliminated. Moreover, accurate tracking help in improving overall process management. Similarly, the account details and employee details can be managed using specific software developed for these tasks. Therefore, the logistics firm should embrace technology for increasing productivity.
- Learn from Mistakes
This goes for most everything. You will make missteps on your journey of managing logistics. That is a given. What is not assured is that you will learn from those mistakes, so they do not happen again. Therefore, take time to look back on what you have done, where it worked and where it did not, and get feedback from your team.
The FLEX Logistics Team is Here to Help!
The potential for companies to capitalize on this burgeoning market is high. It is imperative that companies consider the trends that will continue to influence the industry and the technologies that will help address them. With the right technology and approach, brands and retailers can stay ahead of competition, win consumer loyalty, and drive ongoing business success for years to come.
Our team understands the importance of getting your products to the market. That is why we aim to understand your business and build lasting relationships with you and your team. Whether you are looking to add a new warehouse to your existing operations, growing and need to increase your distribution efforts, or starting a new company, FLEX has the solutions to meet your supply chain needs.
Contact us today to discuss your current and future warehousing and logistics needs. We will work together with you to understand your requirements and develop a solution that will set you up for future success.