Importance of Logistics in Supply Chain Management

One can easily optimize the functionality of an organization’s business operations by having a good supply chain management system. There’s always ever-changing customer demands thus making supply chain complex. In this regard, logistics in supply chain management plays a major role and are inseparable.

You may be wondering what is logistics?

Logistics is the movement of goods from one point to another, and it involves transportation and warehousing. On the other hand, supply chain is made up of a network of businesses or organizations that work in a series of operations such as logistics, production, and distribution.

Logistics involves the alignment of the complex system of production planning, purchasing, transporting, shipping, receiving, importing and exporting, warehousing, inventory management, and customer service.

Importance of Logistics in Supply Chain Management

Logistics management helps in making sure that products are moved from point A to point B is timely, reliable, and cost-effective manner.

Logistics in Supply management helps in Cost Reduction and More Efficiency

Logistics plays a crucial role in the supply chain management and thus has direct effect on the customer demand. The correct and efficient product movement ensures that an organization or business can meet or even exceed the consumer’s demand. The automation of the processes involved in getting products from the suppliers, shipping, and warehousing can lead to a cut in overhead costs.

Because the supply chain management involves many departments, there should be a simplified communication between the departments. This helps in creating a workflow that aids in cost reduction by increasing visibility.

There’s reduction of costs through reducing warehousing costs. Businesses will only purchase purely on supply forecasts proper inventory management, good shipping and on-time delivery of the products to the consumer.

Proper Logistics Improves Warehouse Management

Once an organization has ensured that they have an effective logistics system then they will have a better warehouse management. Warehouse management is dependent on the type of goods that your business is handling. For instance, if you are dealing with a very sensitive and breakable goods then your logistics strategy should involve a warehouse inventory plan minimizing breakage. Logistics management will ensure that the weak points in your organization are visible and effective solutions are made.

Correct logistics management increases visibility in the supply chain. Increased visibility ensures that business control their costs better, identification of supply chain issues, demand planning, and the ability to spot other opportunities within their operations.

Logistics Management Provides Consumer Satisfaction or Service

For any business to thrive, they need satisfied customers. Proper logistics management helps in coming up with reliable strategies that provide improved and better services thus meeting customer demand.

Besides, wouldn’t it be great if a business has repeat sales. Repeat sales are dependent on great customer experience. Delivering accurate products to the customers quickly helps in improving customer experience that can also lead to brand loyalty.

Logistics in Supply chain Ensures Timely Delivery

Logistics management helps in making sure that products are delivered fast, efficiently, and on time. There are instances where businesses have lost potential customers due to late deliveries. Successful businesses make sure that they offer same day delivery where possible and making sure that the customers et their products on time.

Proper logistics management should be a primary goal to businesses to avoid losing sales to late deliveries. On-time delivery of products to customers is affected by factors such as lead time management, supplier management, and proper inventory management among others.

Logistics Plays a Major role in the Success of Supply Chain

Supply chain management involves the management from the production stage to the product delivery. There are networks involved in supply chain such as production, shipping, and warehousing and they hugely affect the sales and profits of a business.

Therefore, having a well thought and effective logistics management system helps the business to have a competitive edge over its rivals.

It’s not enough to have a good marketing strategy and good products, having a reliable logistics system helps in maintaining the positive image of a business.

Logistics in Supply Chain Reduces Need for Intermediary Services

Without proper logistics management, a business is likely to have the need for intermediary services such as transportation and storage. However, a trained logistician comes up with ways of reducing the need for third party services thus reducing extra costs and ensuring effective logistics management.

Logistics in supply chain management also ensures that the supporting documentation for all the goods are available. Having the right documentation aids in eliminating any legal restrictions.

The 7 Rs of Logistics According to the Chartered Institute of Logistics and Transport

  • Right product: The delivery of the right product in terms of the color, size, quantity, and brand as requested.
  • Right quantity: For a business to deliver the right quantity to the consumer there should be clarity on how inventory is listed.
  • Right condition: Products should be checked for any damage before delivering to the client.
  • Right place: there should be a tracking system to ensures that the goods are delivered to the correct address.
  • Right time: Timing is everything to a customer.
  • Right customer: Automation helps to avoid order mix ups and minimize errors when delivering orders to the right customer.
  • Right price: Business should ensure that they have competitive prices for their products. Prices should be adjusted depending on the demand.

From the above, one can see that logistics in supply chain management are inseparable. Join us in our upcoming short training courses on logistics and supply chain management.

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