A supply chain is a system of organizations, people, activities, information, and resources involved in supplying a product or service to a consumer. Supply chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer.
What is Logistics?
Logistics is that part of supply chain management that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements. It is about getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and at the right cost.
There are many elements that play key roles within a logistical structure, for example, prices and volumes are reviewed to make sure they fulfill what it is being required. Quality assurance deals with the precision of what is being acquired and shipping and handling regulates and control the time that takes to move the items from the shipping point to the delivery point.
Logistics play a crucial role to ensure high levels of productivity, since it can reduce the time it takes to get what is being demanded in the hand of those that are manufacturing or delivering the goods and services to the final customers.
What is Logistics 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. Think of the steps you have to go through to ship a package to someone else. Even sending a simple object from point A to point B involves choosing a shipping company, packaging the object, transporting it to the shipping place and more.
Now imagine hundreds, thousands of objects, multiple points of origin, multiple destinations, international borders, trucks, freight trains and ships, items that must arrive in a small window of time and done as inexpensively as possible … you can see how things get very complicated very fast.
Logistics Management involves numerous elements, including:
- Selecting appropriate vendors with the ability to provide transportation facilities
- Choosing the most effective routes for transportation
- Discovering the most competent delivery method
- Using software and IT resources to proficiently handle related processes
What is the Difference between Inbound and Outbound Logistics?
- Inbound Logistics refers to movement of goods and raw materials from suppliers to your company. In contrast.
- Outbound Logistics refers to movement of finished goods from your company to customers.
What is 3PL or Third Party Logistics?
Third-party logistics, or 3PL, is used interchangeably with fulfillment warehouse or fulfillment center. Companies that provide 3PL services offer many of the same services as order fulfillment companies. These services include:
- Inventory management
- Shipping and receiving
- FTL and LTL freight shipping
- Picking and packing
- Kitting and customization
- Reverse logistics (returns)
A third-party logistics company acts as an eCommerce fulfillment company. It provides all the services you need to outsource your logistics operations.
What is 4PL or Fourth Party Logistics?
A firm using fourth party logistics outsources all its logistics operations to a single logistics partner. That partner is responsible for assessing, designing, planning, building, running, and even tracking an integrated comprehensive supply chain solution on the behalf of the firm. This is different from other types of logistics models, where the firm may outsource just the delivery process. Therefore, fourth party logistics represents a higher level of supply chain management for the client. A firm using 2PL or 3PL is more involved in the day-to-day operations, whereas 4PL focuses on strategic management and optimization levels. The responsibility of the 4PL goes far beyond just ensuring timely delivery.
Businesses nowadays are manufacturing diverse products and have activities spread across the world. With the advent of e-commerce and next-day delivery promises, customers expect a high level of omnichannel delivery service. Thus, businesses have to handle multiple logistics arrangements across online and offline channels. And they have to constantly strive for faster deliveries and cheaper logistics costs.
What is Supply Chain?
A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. This network includes different activities, people, entities, information, and resources. The supply chain also represents the steps it takes to get the product or service from its original state to the customer.
Companies develop supply chains so they can reduce their costs and remain competitive in the business landscape.
What is Supply Chain Management?
Supply chain management is the coordination of all processes involved in the flow of goods from their raw materials to the end users. Through effective electronic communications and transparency, every “link” in the chain can anticipate the demand requirements of the next level and plan for fulfilling each need in the shortest possible time.
In the end, the key driver of supply chain management is the quality and competitiveness of the final product, benefits that reward each link of the supply chain.
What is the Supply Chain Management Process?
The supply chain management process is composed of four main parts: demand management, supply management, S&OP, and product portfolio management.
1. Demand management
Demand management consists of three parts: demand planning, merchandise planning, and trade promotion planning.
- Demand planning is the process of forecasting demand to make sure products can be reliably delivered. Effective demand planning can improve the accuracy of revenue forecasts, align inventory levels with peaks and troughs in demand, and enhance profitability for a particular channel or product.
- Merchandise planning is a systematic approach to planning, buying, and selling merchandise to maximize the return on investment (ROI) while simultaneously making merchandise available at the places, times, prices, and quantities that the market demands.
- Trade promotion planning is a marketing technique to increase demand for products in retail stores based on special pricing, display fixtures, demonstrations, value-added bonuses, no-obligation gifts, and other promotions. Trade promotions help drive short-term consumer demand for products normally sold in retail environments.
2. Supply management
Supply management is made up of five areas: supply planning, production planning, inventory planning, capacity planning, and distribution planning.
- Supply planning determines how best to fulfill the requirements created from the demand plan. The objective is to balance supply and demand in a manner that achieves the financial and service objectives of the enterprise.
- Production planning addresses the production and manufacturing modules within a company. It considers the resource allocation of employees, materials, and of production capacity.
- Inventory planning determines the optimal quantity and timing of inventory to align it with sales and production needs.
- Capacity planning determines the production staff and equipment needed to meet the demand for products.
- Distribution planning and network planning oversees the movement of goods from a supplier or manufacturer to the point of sale. Distribution management is an overarching term that refers to processes such as packaging, inventory, warehousing, supply chain, and logistics.
3. Sales and operations planning (S&OP)
S&OP, or sales & operations planning, is a monthly integrated business management process that empowers leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, and new product introduction.
With an eye on financial and business impact, the goal of S&OP software is to enable executives to make better-informed decisions through a dynamic connection of plans and strategies across the business. Often repeated on a monthly basis, S&OP enables effective
supply chain management and focuses the resources of an organization on delivering what their customers need while staying profitable.
4. Product portfolio management
Product Portfolio Management is a practice designed to manage all aspects of the products your company sells. This involves evaluating their performance, identifying risks and opportunities, prioritizing high-value products, optimizing resource allocation across the portfolio and balancing the product mix among strategic buckets. Done right, this practice aligns the product portfolio with business strategies to achieve target revenue and profitability.
Product portfolio management includes:
- New product introduction
- End-of-life planning
- Cannibalization planning
- Commercialization and ramp planning
- Contribution margin analysis
- Portfolio management
- Brand, portfolio, and platform planning
5. Supply chain management best practices
Successfully managing a supply chain may be the most difficult aspect of your business, yet, it stands as one of the most crucial. Your supply chain management could be the difference between substantial growth or the gradual dwindling of business.
Historically, supply chain management was only concerned with moving items from Point A to Point B. Today, companies must break down their supply chain in an ever-growing competitive market. Successful supply chain management is no longer bound only to delivering a shipment, but doing so in a qualitative manner while simultaneously lowering the associated costs. Transportation spend management has emerged as a vital aspect of any supply chain that could effectively change the course of your company’s growth.
The FLEX Logistics Team is Here to Help!
How do you find this waste in logistics operations or any aspect of your business? The easiest way is to simply go to areas of concern and just observe. Bring a pad and pencil along with a list of the types of wastes. See how many of the wastes you can identify then develop an action plan for resolution. To take an even deeper dive, develop a process flow map that identifies value added and non-value added steps in a process. Try to eliminate as many of the non-value added steps as possible.
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.