Logistics management is the term for managing that work process. It takes everything into account, from information to materials, production, and so on. The many stages of any product will quickly devolve into a chaotic mess without logistics management. Don’t freak out if you don’t know much about logistics management. The fundamentals of supply chain marketing and logistics management marketing are discussed below.
What is Logistics Management?
Logistics management is the detailed process of planning and carrying out an operation. When it comes to business, that process is the flow of work from start to finish to meet both customer and organizational expectations.
Logistics management manages resources that can range from tangible goods (such as materials, equipment, and supplies) to food or other consumable items. In doing so, logistics management deals with integrating the flow of information and its management tools, materials handling, production packaging, inventory, transportation, warehousing, and sometimes security.
Supply Chain Logistics Management
Logistics management is a subset of the larger field of supply chain management. Supply chain management plans implement, and control the efficient flow of storage, goods, services, and related information from the point of origin to the point of consumption. This is done to meet the requirements of customers.
Logistics management in business works across all industries. It aims to manage the fruition of project life cycles, supply chains, and resultant efficiencies. Business logisticians have evolved into “supply chain logisticians” as businesses have become more complex and have expanded into a global marketplace.
Inbound logistics for internal functions and outbound logistics for the external flow from the point of origin to the point of consumption are the two main areas of focus in logistics management for businesses. Inventory management, purchasing, transportation, warehousing, consultation, and the organization and mapping of these processes are the main areas of concentration for logisticians.
What are the Different Types of Logistics Management
There are four main types of logistics management, each focusing on a different aspect of the supply chain.
#1. Supply Management and Logistics
This entails the planning, procurement, and coordination of materials required at a specific time and location for the completion of a task. This includes both the transportation of the materials and a location to store them. Furthermore, evaluating the level of supply at various stages of the process is required to ensure that the customer’s needs are met, such as when delivering materials to a construction site or parts to a manufacturing plant.
#2. Distribution and Material Movement
This transports stored materials to their final destination. Moving materials, including loading, unloading, and transportation, as well as keeping track of the stock and how it is used, are issues in this. The movement of supplies from a central warehouse to the retail outlets where the product is sold is controlled by this type of management.
#3. Production Logistics and Management
This manages the stages of combining distributed supplies into a product, such as coordinating what is required to make or assemble something. This entails preparing materials for use in the building of a product at the appropriate time. This type of logistics management is product management.
#4. Product Return and Reverse Logistics
This relates to the management of the process of reclaiming materials and supplies from manufacturing. For example, on a construction site, it entails removing excess material and returning it to one’s stock. It can also refer to a customer returning unwanted or unused products to receive a refund.
Why is Logistics Management Important for your Supply Chain?
Logistics management refers to the oversight of the entire e-commerce supply chain, from the supply of finished goods to the delivery of orders to their final location. Logistics management aims to meet customer expectations for accurate and timely delivery while minimizing internal costs.
Here are three reasons why logistics management is important if you’re ready to expand your e-commerce business.
#1. Accurate product delivery
In today’s ultra-competitive e-commerce industry, most direct-to-consumer (DTC) brands strive for order accuracy rates as close to 100% as possible. Although perfect accuracy is not always possible, a good accuracy rate is between 96 and 98%. Any rate less than 95% indicates that there is room for improvement.
#2. Maintains low logistical costs
Poor logistics management raises logistics costs, including storage and fulfillment costs, which can hurt your bottom line. Logistics management can help keep logistics costs low in several ways, including:
- Lowering sourcing costs by locating suppliers near your warehouse or store
- Keeping storage and purchase costs low by stocking only high-performing products
- Constantly improving your logistics processes to keep up with supply chain changes
Logistics management has the potential to provide insights into your operations with the right resources and technology, allowing you to identify areas for improvement and save money.
#3. Increase customer satisfaction
If an order is delivered with incorrect items, the unboxing experience is ruined. If a customer’s order is delayed, the shipping experience suffers.
Customer expectations are heavily influenced by logistics management. An effective supply chain is essential for the post-purchase journey.
Stages of Logistics Management You Need to Know
Though several steps make up the entire supply chain, logistics management is primarily concerned with three major stages. The three main stages of logistics management are summarized below.
#1. Procurement
If you don’t source e-commerce inventory, you won’t have any to sell. The first step is to source and locate suitable suppliers and manufacturers of finished goods. Quality and dependability, production lead times, and costs are all factors to consider during the procurement process.
#2. Storage
Once the goods have been procured from the supplier, inventory must be received and properly stored. You can store inventory at home (for in-house fulfillment), in a rented warehouse, or at a 3PL fulfillment center (or centers). However, regardless of where you store your inventory, it must be stored in a way that maximizes space while also working with your fulfillment workflow.
#3. Order fulfillment
One of the most important components of the supply chain is fulfillment logistics. Order processing, picking, packing workflows, and shipping are all part of it. You must decide how you will fulfill orders to meet customer expectations during the order fulfillment process. Order accuracy is just as important as speed. You must also consider shipping costs and the various e-commerce shipping options available to customers.
Supply Chain and Logistics Management
Supply chain management and logistics are sometimes used interchangeably. According to some, supply chain management is the “new” logistics, and there is no distinction between the terms.
To make matters worse, according to the blog of PLS Logistics Services, a logistics management firm in Pennsylvania, what is considered supply chain management in the United States is more commonly known as logistics management in Europe.
When asked in an Inbound Logistics article, the responses varied depending on the functions a supply chain (or logistics) professional handled. Some feedback from their readers:
- “There is no difference today,” said Wayne Johnson of American Gypsum.
- According to Michael Kirby of National Distribution Centers, “Supply chain management incorporates the field of logistics, and logistics is several sub-processes within SCM.”
- “A supply chain management company is generally a third-party operator managing the total overall movement of the product, whether inbound or outbound,” said William Behrens of Associated Transport Systems, Inc.
Purchasing, materials handling, logistics, transportation, inventory control, and supply chain management have all evolved, causing many of these functional areas to cross. Some of these terms, like logistics and supply chain management, have blurred definitions as a result of this intersection.
While these two terms share some similarities, they are distinct concepts with different meanings. Logistics refers to the movement, storage, and flow of goods, services, and information within the overall supply chain, whereas supply chain management is an overarching concept that connects multiple processes to achieve a competitive advantage.
Key Differences
It is critical to remember that, while the terms should not be used interchangeably, they do complement one another. One process cannot exist without the other. Here are some key distinctions between the two terms that will help you avoid confusing them.
- To create a high-performance business model that drives competitive advantage, supply chain management is a method of connecting major business processes within and across organizations.
- The movement, storage, and flow of goods, services, and information within and outside the organization are referred to as logistics.
- While logistics is primarily concerned with meeting customer needs, the supply chain is primarily concerned with gaining a competitive advantage.
- While supply chain management is a relatively new term, logistics is a term that has been around for a long time, emerging from its military roots.
- The supply chain includes logistics activities.
Role of Logistics in Supply Chain Management
The movement and storage of goods and services, as well as the documents and reports that document those movements throughout an item’s journey to the customer, are all under the purview of logistics in supply chain management.
Logistics refers to the various transportation methods used to transport inventory from one location to another. This component determines where goods can be stored at each stage until they are needed at another location, which is critical for effective supply chain management.
Logistics Management Marketing
Planning, implementing, and controlling the movement of materials and components from suppliers to customers is referred to as marketing logistics. It also includes transferring all relevant information throughout the supply chain, from manufacturing and origin to final consumption.
The distribution of goods and services from the producer to the final customer at the right place, time, and price is referred to as marketing logistics.
Marketing logistics aims to create a systematic and planned ecosystem that ensures that goods ordered by customers are delivered on time, with proper transportation, and as quickly and cheaply as possible.
The Four Functions of Marketing Logistics
#1. Product Delivery
Product delivery is the primary function of marketing logistics. This includes investigating where your customers live and how you intend to deliver the product. It could be accomplished through in-house order fulfillment and shipping or through a 3PL fulfillment provider. The products must be delivered to the customers on time.
#2. Price
The price function comes next in marketing logistics. The price of the products must be determined while taking into account the logistics of procuring and delivering the product. In addition, the price is affected by several internal and external factors. It must comprehend how the elements influence consumer decisions.
#3. Promotion
Promotion is crucial for increasing your company’s sales. When a new product is introduced in marketing logistics, communication is crucial to ensuring that appropriate materials are used and that customers are informed. To ensure that the correct information is gathered for the marketing materials, marketing logistics collaborates with various departments.
#4. Place
Delivering the product to the customer efficiently and safely is the ultimate goal of marketing logistics. The products should be distributed to the correct location, namely the customer’s address. This entails providing customers with tracking information, verifying their delivery information, and so on.
What is the Role of Marketing in Logistics?
#1. Warehousing
Warehousing is the first function of marketing logistics. Businesses must store inventory in warehouses of various shapes and sizes. Marketing logistics is responsible for determining whether the warehouse location is correct in terms of delivery, production, pricing, and other factors. It must determine whether the warehouse’s design is correct, the number of shelves required, and so on.
#2. Inventory Management
Your e-commerce fulfillment supply chain must include inventory management as a major element. It is in charge of the SKUs that are kept in the warehouse. The cost of carrying inventory, ordering raw materials from suppliers, and controlling inventory costs are all issues that fall under the purview of marketing logistics.
#3. Shipping and Delivery
The next role of marketing logistics is to consider the best route for shipping products, the best courier partners for delivery, and so on.
#4. Communication
Communication is the most important function of marketing logistics. This includes customer service and promotional communication. The tracking information is sent to the customer, as well as any customer queries that may arise following delivery, handling returns, and so on.
What is the Importance of Marketing Logistics Management?
Marketing logistics is an important component of any business because it ensures that the products and all product-related information, reach the right customers. A good product is useless unless it reaches the right customers at the right time and place. Marketing logistics management is a crucial study in which a company must analyze where a finished product is required, how the products should be transported when they are required, what product information must be shared, and so on. Even the best products may not have a positive impact on business without a proper marketing and logistics plan.
What are the three main activities in logistics?
Order processing, inventory management, and freight transportation make up the three main components of logistics systems.
What is the aim of logistics?
Logistics management’s main goal is to execute proper planning on transportation modes and inventory available to satisfy customers. This results in a smooth freight moving process and timely product or goods delivery.
What are the types of logistics?
Procurement logistics, production logistics, sales logistics, recovery logistics, and recycling logistics are the five types of logistics by field.
What are the roles of a logistics manager?
Logistics managers oversee purchasing, shipping, and supply chain management operations. They are excellent negotiators, organizers, and problem solvers who use their abilities to coordinate critical business operations.
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