Logistics management constitutes supply chain management that plans, implements, and controls the efficient flow and storage of goods, services and related information in order to meet customers’ requirements. This involves supervision of movement of goods. Effective logistics helps to maintain the organisation’s inventory at lower levels yet achieving customer requirements.
This movement of goods is dependent on a number of factors like availability of inventory and timely transportation. Efficient product handling ensures minimal product damage and warrants the profit numbers.
Benefits of Logistics Management
Enhanced Customer Satisfaction
A good management strategy at the initial level within the company will keep the transportation process optimized and any damages in check.
Any order delivery to the customer is largely dependent on undamaged and quick shipment to establish their gratification in the company. This will build a good brand reputation and generate more business and will ensure a positive customer experience.
Better Visibility into Supply Chain
Logistics basically gives a detailed insight into the inventory movement across a supply chain. The system plays a vital role in delivering superior service to the customers.
A well chartered transportation management system helps analyse the horizontal data of inventory better and can track the real time movement of inbound and outbound commodities. This avoids any disruption in the flow of services and also helps the logistic managers to keep moving the company’s supply chain smoothly.
Proper management of logistics will keep the inventory optimised, the inbound freight overheads within ideal limits and pick the best transportation modes thus cutting down on any unnecessary expenses significantly.
Ensuring Better Functioning of Logistics
The purchase order placed by a buyer to the brand (or supplier) is like a legal transaction document between the two parties. The purchase order contains significant details like product specifications, price, estimated delivery, payment mode, taxes levied and any other terms and conditions. The timely coordination of this document can guarantee a timely delivery performance cycle or order processing.
The average cost of carrying inventory varies from 10 to 25 percent of the total inventory per year depending on the products. For higher profits, this carrying cost should be the lowest. A right balance between maintaining inventory as per customer demands and assessing the cost to meet the same should always be observed.
Warehousing is the key decision area in logistics and involves the storing of finished goods until they are sold and plays a vital role in logistics operations of a firm. The organisation’s marketing potency heavily depends on the appropriate decision on warehousing like its location, size and layout.
Transportation is the most fundamental component of logistics. It constitutes 65-70 percent of the logistics costs.
A transaction is considered completed only after the goods are physically transported to the customer’s place in undamaged condition.
Firms could decide upon any mode of transportation depending on the destination region and more importantly the cost of that transportation.
Material handling and storage system
Proper material handling would ascertain smooth movement across the supply chain and enhance logistics system productivity. Improper handling mechanisms at any stage would result in incidental overheads and delayed deliveries. Material handling should also support the warehouse storage space for a speedy movement of goods.
Unlike attractive product packaging that is based on marketing objectives, industrial packaging focuses on safeguarding the product within using cost effective materials and proper utilization of storage space.
The above blog has been collaborated on by Desmond Christopher, our Logistics Team member. For more such articles, stay tuned to Square Off’s Blog space.
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