Logistics has become a complex process in which companies need to manage their entire supply chain efficiently. Logistics management is the movement of goods from manufacturer to distributor, or end-user. It goes far beyond this and is an integral part of the supply chain—the interlinking of procurement, manufacturing, fulfillment, and distribution of products.
Logistics management involves a network of transportation via road, air, rail, or ocean. This activity also includes suppliers, agents, freight forwarding providers, distributors, packers, and service providers. Planning, inventory control, packaging and handling, transportation, and information are all major components of logistics management.
Proper planning is necessary to make sure that all aspects of the process are coordinated and implemented. Planning and analysis are used to create systems for logistics and support of the system. A detailed plan must be implemented in order to make sure the flow of goods is not interrupted, and all items get to where they need to go…on time.
Inventory levels must be kept so that customer requirements are met. At the same time, carrying costs should be low so the company does not have too much inventory on hand, which can be a delicate balance. Inventory levels that are too high affect margins and the business as a whole.
Packaging and Handling
A large part of logistics is keeping track of materials, equipment, supplies, and packaging materials so that goods are preserved and stored correctly. This includes repair parts, computer resources, and mobile facilities. All of these components must be managed so that the logistics process runs smoothly.
The transportation aspect of logistics management is the most complex and costly. The distribution of goods whether it be intermodal, truck, air, rail, or ocean requires planning and support throughout the entire cycle. When a customer places an order, it is not complete until those goods have reached the customer’s door. International shipping brings another layer of complexity to the transportation equation. Tax codes, customs clearance, and payment options must all be determined before the product even leaves the warehouse.
The advent of eCommerce has made it imperative to get orders delivered to customers as fast as possible. Accounting for over $500 billion in sales in the U.S. in 2018, this industry will continue to grow, and it will be up to logistics managers to figure out how to best manage it. Transportation can represent 50 percent or more of a logistics budget, meaning that finding the best and quickest service for the lowest cost is an important piece of the transportation component.
The flow of information throughout the logistics management process is necessary, especially in this technology-driven society. Data-driven logistics will continue to drive the future of the industry. The use of data enables logistics managers to anticipate demand more accurately and alter the capacity to meet it. More logistics companies will rely on data visualization techniques, algorithms, and analytics to provide faster service to customers.
The logistics industry has been experiencing a lot of change over the last few years with eCommerce. Advances in the industry will continue to shape the components of logistics management.