The success of an organization depends largely on the efficient role of logistics in supply chain management. Supply chain management (SCM) is the comprehensive process of coordination and management of the entire production flow of goods and services from the beginning of the production process through delivery to the consumer. It comprises activities related to business processes such as procurement, manufacturing, storing, maintenance, distribution, and so on. The ultimate goal is to achieve a sustainable competitive advantage by using new-age technologies and optimizing these processes.
Logistics is an integral part of SCM that refers to the planning of the movement and storage of the goods from the producer to the end consumer. It plays an essential role in determining how resources are acquired, stored, and transported in the most cost-effective manner to the final destination for fulfilling customer demands.
Why is logistics management important in the supply chain?
Logistics is an aspect of the supply chain that has multiple roles and functions which enhance the overall growth of operations. Creating an effective logistics strategy by implementing technological advancements can lead your business to the next level. As the logistics process monitors the storing and transporting of the goods or services to the final destination. Therefore, we can conclude that logistics and supply chain go hand in hand.
Business of all sizes streamlines the logistics processes to minimize the cost and increase the efficiencies of overall operations. It will help the organizations to determine and identify the potential problems which are beneficial to optimizing end-to-end supply chain operations.
Top 10 Roles of Logistics in Supply Chain Management
Logistics is considered to be an essential component of supply chain management. It comprises several modes of transportation that begins from delivering the right products or goods at the best time.
Here are some of the major roles of logistics in the supply chain:
1. Order Processing
The major role of logistics in the supply chain begins with order processing as the company accepts the order from the customer. Effective logistics tends to manage the entire workflow that starts from order placement to delivery. Nowadays, the order processing activity is technical-centric which is crucially dependent on the size of the business as it focuses on fulfilling the customer orders. A well-managed logistics ecosystem ensures that the orders are properly prepared, packaged, and delivered to the destination. These are the major functions of order processing-
Picking inventory
Order placement
Sorting
Packing
Shipping
2. Warehouse Management
Managing and storing the inventory is a major process of warehouse management system because it safeguard the goods which are to be distributed to the customers. It plays a huge role in the supply chain as it is the centralized location that stores all the inventory, whether it is raw materials or finished goods. Therefore, it is always advisable that warehouses should be near to the dealer or the distributors’ place for the efficient delivery of the goods.
Therefore, a warehouse management system effectively audits and tracks the materials and goods. Also, it is responsible for determining the special requirements like docking facilities, cold storage, etc.
3. Inventory Management
It is among the logistics functions that determine and identify how much stock is needed to order at what time. As it is important to maintain sufficient level inventories for fulfilling the customer demands. It helps organizations to monitor inventory records for restocking and predicting the demand for goods, ensuring safety, and so on. Effective inventory management tends to determine and analyze if there is too much or too little stock in the warehouses. It will help you to meet the customer demands through production and optimizing the inventory. Therefore, tracking inventory databases is essential to making decisions about supply chain operations.
4. Transportation
The act of transporting the goods throughout a company’s supply chain efficiently is the most important role of logistics management. It involves automated routing and route optimization that tremendously saves cost and determines the success of supply chain management. In the contemporary world, implementing technological advancements in logistics activities is highly inevitable as it manages the overall operations and strengthens customer loyalty. Therefore, it involves the movement of goods from one point to another by following the compliance and regulations in the logistics industry. Investing in a fleet management system can mitigate the transportation risk.
5. Packaging
During transport and handling, the products or goods can be subjected to breakage or spillage so good packaging is necessary to prevent any kind of mishap. The role of logistics management is to ensure that the products are safely transferred in large volumes from point A to point B. The necessary measures should be taken to avoid regulatory issues and make transportation cost-effective in the logistics industry.
Having the right logistics packaging is majorly important for a well-packaged product that can prevent your product from any kind of damage, deterioration, and tampering.
6. Demand Forecasting
Logistics demand forecasting is an effective way to anticipate the requirement for products or goods in the supply chain management process. The scheduling and planning of processes are important to manage the uncontrollable conditions or circumstances of the market. Therefore, forecasting models help businesses to make informed decisions by predicting customer demands and fulfilling the orders in the shortest time span. Therefore, the use of modern technology with advanced analytics and powerful databases can take your organization to the next leap.
7. Quick Response
One of the most important roles of logistics is to resolve the customer query in the shortest time span. It enables the fleet owners to manage the supply chain for meeting consumer demands. Therefore, it helps the organizations to operate reactively to each order without bottlenecks, delays, and errors. A quick response strategy can lead to accuracy and fulfillment of customer orders.
Responding to the customers in real-time is the most constructive business practice. In the contemporary world, deploying new-age technology can save a lot of time by meeting the customer’s needs.
8. Material Handling
It is necessary that logistics companies should store and protect the materials throughout the process of manufacturing, warehousing, and distribution. Handling the materials efficiently can ensure that the products or goods are reaching safely to the customers with ever-rising shipping costs.
The role of logistics management is to embrace and support the diverse needs of the customers by analyzing the product demand and implementing robust material handling systems. Therefore, optimizing the logistics processes by improving the material handling and streamlining the delivery times can improve the overall customer service.
9. Fleet Management
Tracking and monitoring commercial vehicles with the best GPS company in Jaipur is an important function of logistics as it manages cost and improves the maintenance of fleets. It enhances the safety of the drivers and fleets by providing real-time visibility to businesses. It is the best way to enhance operational efficiency and ensure compliance within the supply chain.
In order to effectively manage fleets, businesses are using new-age technologies like Artificial Intelligence, the Internet of Things, Big Data and so on to improve vehicle performance and utilization. Therefore, it is known to be the major role of logistics management as it is the most effective way to establish customer retention by delivering the goods to the right customers at the right time.
10. Information and Control
Data-driven logistics operations are fundamental processes of supply chain operations. It is essential to monitor and manage the operations to make better decisions. However, getting insightful information for operating a workflow can help businesses to achieve transparency in the entire supply chain.
Information and control are most valuable for achieving strategic goals and strengthening the future of the logistics industry. Analyzing and understanding the logistics operations tends to simplify the overall management processes. As it helps the organizations keep track of day-to-day activities. Therefore, monitoring the flow of information can help businesses in creating holistic supply chain management.
Final Thoughts
These are some of the major roles of logistics in supply chain management. It will help you to manage the operations as it involves moving goods throughout the supply chain processes. Therefore, optimizing the major logistics activities can be beneficial to evaluate the overall performance by reducing the expenses and enhancing overall delivery effectiveness.
