What is Supply Chain Management?

Logistics management and supply chain management are often used synonymously. While each ensures the efficiency of operations, they are different and part of a single process. Many even suggest logistics management is a component of supply chain management. Today, we will only focus on logistics management and explore much beyond the differences. Buckle up! 

First, let’s understand what is logistics. The term logistics refers to the handling of the movement of goods from one point to another. It covers the supply chain process of managing the sourcing of raw materials and transporting the goods to the final destination. 

Logistics is the essence of an efficient business. Planning, monitoring and controlling all logistics processes, including finding suitable suppliers, cutting costs, meeting customer demands, etc., are vital to increasing a company’s bottom line. 

Transportation management and warehouse management are central to the logistics of any business. The first deals with optimising the movement of goods, preferably through software. The latter deals with organising storage space and managing the inventory. 

What is Logistics Management?

Logistics management deals with all the phase-wise logistics processes. Materials handling, evaluation of transport route conditions, managing and complying with customs regulations, and timely deliveries are all part of a logistician’s job. 

Logistics Management Best Practices

Logistics management in any organisation features the following goals. 

1. Maximise profits
2. Optimise the operating costs
3. Minimise costs of transportation
4. Aim for the highest customer satisfaction

Why is Logistics Management Important?

Being a uniform system of handling processes from beginning to end, logistics management ensures customer satisfaction and profits. 

Increased Efficiency

Logistics management makes operations efficient. Through software available for various processes, logisticians automate various tasks and monitor delivery methods. Planning is also important and they identify risks. Even if there are accidental risks, logisticians create separate plans. The main goal of delivering the best possible product at the right time and without any defects remains intact. 

Improved Visibility 

Logistics management improves the visibility of the entire supply chain process. Tracking the real-time movement of goods to implement any change in processes is necessary. This kind of tracking is also done by focusing on historical information to avoid future disruptions in the supply chain. 

How is Logistics Management Different from Supply Chain Management?

Logistics management only focuses on optimising the movement of goods. For that logisticians take care of day-to-day operations to ensure the product reaches the final destination smoothly. 

SCM or supply chain management is broader in scope. It connects every process from the supplier to the customer. So you can consider logistics management to be an element of a supply chain. 

Types of Logistics Management

In a supply chain, logistics management has four categories. 

Management of Supply Stages and Logistics

Here the requirements for making a product such as a place and material procurement is handled. It is also concerned with planning all the supply stages and transportation. 

Movement of Materials and Distribution

Inventory management such as tracking the resources stock and sending materials from the warehouse to the commercial store or the customer is part of this category. 

Logistics of Production 

This category of logistics management is parallel to product management. The right materials should be sourced for producing a product.

Reverse Logistics

Reverse logistics in logistics management can be better understood through an example. Let’s say, a customer is unhappy with the product. Logisticians are responsible for transporting the goods from the customer to the manufacturing unit or seller. 

How Does Logistics Management Work?

Logistics management takes care of the following. 

1. Sourcing Materials - It is important for logisticians to reduce costs when procuring raw materials. Other than that they have to look at unforeseen factors that can increase costs and shipment time. 
2. Modes of Transportation - To move goods from one point to another, it is essential to determine the most suitable way of distributing goods. 
3. Fulfilling orders - Order fulfilment is an important aspect after manufacturing a product - from packaging to shipping it to the customer.
4. Storage Availability - This falls under warehouse management. It is important to find if there is storage space available after procuring the materials. Other aspects such as facilities available at the space. 
5. Demand Forecasting - It is to predict the demand of products and shipments in an accurate manner by looking into historical information of past sales. 
6. Managing Inventory - Inventory management should be efficient. Sometimes a high demand for a product will quickly reduce the inventory and it is essential to keep stock of materials at hand. 
7. Managing Supply - Logistics makes sure the flow of goods goes as smoothly as possible from the supplier to the buyer. If that is not handled effectively, it will affect the entire supply chain process. 

Understanding Distribution in Logistics Management

The distribution network in logistics management is made up of several locations and revolves around the movement of the product. Factories or units that produce the product, warehouses storing that product, centres that can give out the product, and stores that will sell the product to the customer, are some of the examples. 

7 Rs of Logistics Management

The 7 Rs that the UK’s Chartered Institute of Logistics and Transport highlights are essential to consider in the field of logistics management. Adhering to these will make any business successful. 

1. Right Product
2. Right Quantity
3. Right Condition
4. Right Place
5. Right Time
6. Right Customer
7. Right Price

Top Courses in Logistics Management

1. Principles of Global Logistics Management on FutureLearn
2. Logistics Management: International Transport & Shipping on Udemy
3. Diploma in Warehousing and Logistics on Online Studies
4. Logistics Management on Udemy
5. Reverse Logistics Management and Sustainability on Udemy

Conclusion

Now you know what is logistics management and why it is essential to the supply chain of a business. It ensures cost-effective measures and helps achieve the highest degree of customer satisfaction.