Meaning of Logistics Management
Logistics management can be defined as one of the components of supply chain management which is consist of planning, implementing, and controlling the flow and storage of Goods & services and other information from origin to point of consumption to reach customer requirements. The logistics process starts with raw material accumulation to the final stage of delivering goods to the point of Consumption. The activities of logistic management include customer service, demand forecasting, inventory management, logistics communications, material handling, order processing, procurement, packaging, transportation, and warehouse management.
The objective of Logistics Management
The main objective of Logistics management is to plan and coordinate all the logistics activities necessary to accomplish desired levels of delivered service and quality at the lowest possible cost.
Importance of Logistics Management
Considering logistics management’s importance, it is vital to have an effective logistics management system for every business organization. there are several reasons such as,
- It optimizes operational costs
When there is transparency and visibility in operational activities, the logistics perform effectively and efficiently. An effective logistics management system can analyze historical data and deliver route optimization to enhance efficiency and reduce costs. It also optimizes asset utilization and improves business efficiency.
- Increase the Profitability of the organization
An effective logistics management system enables the organization to improve clear visibility of their operational activities and helps to maintain an optimum inventory and enhance customer relations. These will be led to an increase in the fulfillment of customer requirements and eventually, will boost the company’s profitability.
- Improves customer experience
With an effective logistics management system, organizations have the ability to provide fast and quality products for their customers. This continuously tries for a better transportation process and provides good customer service. Therefore, it is helpful to add value to the customer experience and it leads to a better company reputation.
- Enhance warehouse management
Warehouse management can be identified as a significant activity in logistics management. The processes in warehouse management consist of sorting, order selection, and transportation, and sometimes include product modification and assembling. When the organization has an effective logistics management system, warehouse activities can be performed effectively. And also, ensures the timely distribution of goods
Several activities can be seen in logistics management. Some logistics activities can be represented as follows,
- Customer service
- Demand forecasting
- Inventory management
- Logistics communications
- Material Handling
- Order processing
- Parts and service support
- Plant and warehouse selection
- Reverse logistics
- Traffic and Transportation
- Warehousing and storage
Types of Logistics Management
Simply, inbound logistics can be referred to as the process of moving materials and other goods from suppliers into a warehouse and then into a production area to make products. Inbound logistics represents the supply part of the supply-demand equation.
For instance, for a furniture manufacturer, the inbound logistics might consist of wood, paints, cleaning materials, glue, nails, screws, and other safety equipment.
Read more about inbound logistics
Outbound logistics refers to the process of moving finished products from the warehouse inventory and delivering them to the customers. For instance, the outbound logistics of a furniture manufacturer would involve finished furniture items.
Read more about outbound logistics
reverse logistics is a vital part of supply chain management. So, reverse logistics can be simply defined as the process of returning products to their point of origin (from the end consumer to the supplier/manufacturer). Some instances of reverse logistics are a delivery failure, unsold goods, return management, and rentals.
Components of Logistics Management
In this article, we discuss six components of logistics management. And the components are as follows,
the supply chain network design can be referred to as the process of planning the supply chain to measure the time and cost needed to bring goods from the point of origin to the market. network design ensures the optimum utilization of organizational resources and helps in bringing the finished goods from the material stage to the final consumable stage in a more efficient way.
Considering the objectives of a network design in supply chain management, the key objectives consist of managing an optimum inventory, enhancing visibility, and identifying potential risks and opportunities to reduce costs.
Material handling and packaging
Material handling, also called material movement is one of the significant components of logistics. It includes the movement of materials, storage control, and protection of materials and packaged goods throughout the manufacturing process, distribution, and disposal.
When it comes to packaging, is an important aspect of material handling, especially for the movement and distribution of products. So the packaging is not only for distribution, but also it provides protection for the product as well as displays information about the product.
Simply, warehouse management can be defined as the process of coordinating all warehouse activities efficiently and effectively. It incorporates the principles and processes involved in running the daily operations of a warehouse. Although warehouse management is an invisible process to customers, it plays an important role in ensuring the on-time delivery of goods to consumers.
Transportation management refers to the optimization of all transportation processes efficiently and effectively along the supply chain.
The term “order processing “, means a workflow that occurs after a customer place an order. this workflow or process includes identification, categorization, selection, packaging, and delivery of final goods to the customer.
While designing an order process, the organization needs to consider some factors such as the nature of the product, the nature of the order, the shipping package, the cost, and the available labor force.
An inventory can be the main asset of an organization. especially for manufacturing companies. Therefore, conducting an optimal inventory is essential. Inventory management is a critical component in the supply chain. Inventory may include raw materials, processing chemicals, packing materials, semi-finished products, or finished products. Hence, it is significant to manage inventory efficiently and effectively to run the production process smoothly without any interruptions.