The need for effective logistics management grows every day, right along with the increasing complexities of supply chain requirements and the necessities of transportation.
The logistics industry is being challenged these days with labor shortages as well as rising inflation. That puts a premium on streamlining logistics management, thus making it more cost-effective. It’s no exaggeration to say that if you don’t have good logistics management, your company could be losing money and in serious trouble.
To meet the demands of your customers and maintain good relationships with them, it is essential to have excellent logistics management.
What exactly is Logistics Management?
To put it simply, logistics management is the process of the control and monitoring of all movements associated with various goods. It takes in quite a few activities, beginning with managing transportation, material handling, inventory management, freight management, and even order fulfillment.
When logistics management is properly executed, it results in maximized revenues, reduced manual labor, better decision-making, and also the ability to meet and exceed customer expectations.
In order to gauge the effectiveness of your logistics management program, there are several factors you can monitor.
The first of these objectives is to increase revenue across the company because that will show that your methods are accurate and that you’re becoming more profitable as a result. Your operating cost structure should also be improved because you have streamlined your logistics.
Overall transportation costs should be reduced when you have good logistics, and all unnecessary expenses should have been identified and eliminated. When all this happens, you should be able to also improve your customer service and meet the expectations of your regular customers.
Here are the other primary objectives of logistics management:
- rapid response – how long it takes you to fulfill a customer order
- minimum variance – on time deliveries with accurate product count
- movement consolidation – because transportation is the biggest cost, goods need to be consolidated
- quality – if the quality is poor, the shipping process would have to be repeated, so good quality is paramount
- minimum inventory – since inventory is a cost to a company, this must be minimized
- support for the life cycle – support for products sold, and right up through disposal
How good Logistics Management can benefit your Company
Here are some of the ways that having good logistics management can help your business:
- improved efficiency – whether you decide to overhaul your logistics and keep it in-house, or whether you outsource it, the fact that you’ve created a plan for it should automatically make it better. If you do in-house logistics, you’ll be able to store materials locally and retrieve them quickly. That will help you execute transactions more quickly so as to improve your business activities. If you choose to outsource, you’ll gain by having increased capacity and much greater visibility.
- cost savings – when you have an efficient logistics strategy, you’ll be able to maintain inventory at optimum levels, you can control inbound freight, you’ll be able to keep the reverse flow of goods well organized, and you’ll be able to arrange the appropriate transportation for your goods. When you consider that inbound freight accounts for up to 40% of all supply chain costs, you’ll have all kinds of opportunities to find cost savings.
- better visibility – having excellent visibility into your supply chain is a must for any company. By using an advanced transportation management system, you can easily analyze historical data, while also tracking movements of goods in and out of storage areas. Logistics managers can make use of this information to help avoid any potential disruptions.
- increased customer satisfaction – it’s a given that customers are always expecting superior service because they require it in order to provide the same great service to their own customers. An outstanding logistics program can cut disruptions and optimize transportation processes. When you consistently provide great customer service, it improves relations with customers and also increases your reputation as a provider. Reputation can be all-important since 93% of all shoppers now read customer reviews to find out about a company before using them. Providing a positive customer experience can promote loyalty to your company. This, in turn, can spread word of mouth to act on behalf of your company. While most customers may not remember what kinds of goods or services they purchased from you some years later, they will remember the good service and experience they had with you.
- better reverse logistics – reverse logistics has been taking on increased importance for several years now, and it has reached the point where it’s almost a critical aspect of logistics management. Reverse logistics covers all those processes that are incurred when a product goes in the opposite of its normal direction, i.e. from the buyer back to the seller. Any company which ignores this area will do so at its peril because it is considered very important by most customers. It is known that customers will return under 10% of all products purchased in a storefront, and as much as 20-30% of product which gets purchased online. If your company hasn’t been paying enough attention to reverse logistics, it’s very likely that you’re losing money, and customers as well.