Logistics is the movement of goods from origin to destination in the order process. Logistics management meets customer demands through the planning and implementation of effective movement of goods and services. It is an important component of the supply chain as it links procurement, manufacturing, fulfillment, and distribution. Logistics management enables companies to decrease expenses.
Logistics management involves a vast network of moving people and parts, on road, air, rail or sea. One item can come into contact with many people including suppliers, freight forwarding providers, packages, distributors, and carriers. The major components of logistics management are planning, inventory control, picking and packing, information, and transportation.
Planning is a vital component of the logistics process so that all activities are coordinated along the supply chain. It is used to create and support logistics systems. A detailed plan is necessary to make sure that goods get to where they need to go correctly and efficiently.
The level of inventory that is kept makes sure that customer requirements are achieved. Logistics managers also try to keep inventory carrying costs at a minimum so that inventory levels are not too high. If a company carries too much inventory of a product, margins are negatively affected, and the business loses money.
Picking and Packaging
Keeping track of all materials, supplies, and packaging equipment ensures that orders go out as they should. All of the parts needed to get an order shipped should be organized and a system should be in place, so the process runs smoothly.
Transportation of goods is the most complicated and costly part of the process. The distribution of goods requires planning and support from beginning to end. When a customer makes a purchase, the process does not end until that item has reached the end-user. For international shipping, the shipping process becomes even more complicated as tax codes, customs clearance, and payment options need to be considered before the goods even ship.
The e-commerce industry has added another layer of complexity to the shipping component. E-commerce accounts for over $500 billion in sales in the U.S. currently and shows no signs of slowing down. And as the number of orders is increasing, customers are also more demanding than ever about receiving the items they purchased, adding additional strain to the transportation segment. Shipping can account for more than 50 percent of logistics spend, meaning logistics managers need to find ways to ship faster, but cheaper…without sacrificing service levels.
Information flows throughout the logistics process continually. Technology aids in real-time updates of exactly where an order is in the process at all times. The use of data enables everyone in the supply chain to track packages and manage demand more accurately. Data-driven logistics will only continue to grow as the industry becomes more complex as more companies rely on algorithms and analytics to make better decisions and provide quicker and better service to their end-users.
The logistics industry has undergone many changes in the last few years as the technology becomes an even bigger piece of the puzzle. These advances will continue to shape logistics to make it a more efficient process.
Metatag: The logistics industry has undergone many changes in recent years. As a result, the components of logistics management have become more complex.
Social Media: Logistics management is becoming even more complex as ecommerce demands faster delivery of items. Here are the major components of the process.
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