What is logistics management?
Logistics management is a part of supply chain management that focuses on meeting customers’ needs and demands via the planning, control, and implementation of the effective movement and storage of related information, goods, and services all the way from the point of origin to destination. It is essentially a very detailed and meticulous process of organizing and implementing logistics operations. The whole process of logistics management helps companies improve their customer experience while lowering their expenses.
The process of logistics management starts off with the accumulation of raw materials and then goes on to the final stage of delivering the goods to the customer. It involves managing durable resources like materials, equipment, and supplies as well as perishable goods like food or other consumable items. It focuses on integrating the flow of information and its management tools, materials handling, production packaging, inventory, transportation, warehousing, and sometimes even security.
There are several elements involved in logistics management -
- Picking the right vendors that have the ability to supply you with transportation facilities
- Selecting the quickest and most efficient routes for transportation
- Identifying the most effective delivery method
- Employing software and IT resources to seamlessly take care of related processes
If bad logistics management decisions are taken, then you see a lot of issues starting to pop up. If you don’t plan and manage your logistics processes and strategies right, you’ll notice your expenses rising and find yourself fighting issues that pop up due to the implementation of ineffective logistics software.
The majority of these problems arise because of improper decisions related to outsourcing, like picking the wrong vendor or going about delivery tasks without allocating the required resources.
Essentially, without proper logistics management, the many phases of a product will rapidly fall into chaos.
The focus in logistics management is two-fold. You have to manage inbound logistics for internal functions and outbound logistics for the external flow from the point of origin to the point of consumption. Logisticians have to bother about inventory management, purchasing, transportation, warehousing, consultation as well as the organization and mapping of these processes.
How is logistics management related to supply chain management?
Supply chain management is a much larger concept and logistics management is just a part of it. You could say that logistics management is a subset of supply chain management. Supply chain management focuses on planning, implementing, and controlling the efficient flow of storage, goods, services, and other related data from the point of origin to the point of consumption.
Today you even see logisticians evolving into supply chain logisticians.
What is the purpose of logistics management?
The whole purpose of logistics management is to identify increasingly efficient and effective methods and routes to transport resources and products all the way from conception to completion and, eventually, to the end customer.
But the main motivation behind this entire process is to meet customer demand and deliver the best service possible to retain customers and maintain their satisfaction by meeting their requirements, thus increasing customer lifetime value.
What are the 4 areas of logistics management?
The four main types and areas of logistics management each emphasize a different aspect of the supply process. These areas are:
Supply Management and Logistics
This focuses on planning, procuring, and even coordinating materials that are required at a specific time at a particular place for the production of a task. Supply chain management and logistics involves transporting the materials and even arranging for a place to store and hold them.
It is also important to evaluate the level of supply at the various stages of the process to ensure that the needs of the customer are met. An example of this could be delivering materials to a construction site or parts for a manufacturing plant.
Distribution and Material Movement
The management of distribution and material movement involves taking stored materials and transporting them to the place where they need to reach. The issues arising over here could revolve around materials; including loading, unloading, and transportation. You even have to monitor and keep track of the stock and how it gets utilized. This area of logistics management focuses on controlling the movement of supplies from a central warehouse to the stores that sell the product to the end consumers.
Production Logistics and Management
Production logistics and management concentrates on managing the stages of combining distributed supplies into a product. This could involve coordinating what is required to make something or put it together. Production logistics and management would involve the staging of materials at the right time to work with the creation of a product. This type of logistics management comes under the domain of product management.
Reverse Logistics and Product Return
Reverse logistics and product return are about the management of reclaiming materials and supplies from production. As an example, on a construction site, reverse logistics could be about the removal of excess material and returning those materials to one’s stock. This type of logistics management could also be about the return of unwanted or unused products from the end customer who is requesting a refund.
What does the distribution network of logistics management look like?
There are several links and points of distribution in a logistics management network. Some of these are:
- Factories that produce products
- Warehouses that hold and store goods and products
- Distribution centers to receive and return items for customers
- Transportation facilities to deliver the products
- Retail locations - from small stores to larger outlets, supermarkets, or even showrooms to sell the products
Though these are the primary hubs for the logistics of a product, there might be a few vendors and intermediaries that happen to be operating between these points.