Which of the following is not a reason for the increased importance of logistics?
To gain a better understanding of supply chain management, take this 13-question quiz and ensure you have a firm grasp of the key terms and processes it encompasses. Show
When it comes to supply chain management, there's one goal in mind: getting the right product to the consumer in the most efficient and cost-effective way possible. However, doing so successfully requires numerous processes and resources to be in place. With the amount of work that goes into it, the number of people that have to collaborate and the modern, digital technologies available, it can be hard to decide what strategy aligns best with your business goals. So, how about brushing up on some supply chain management basics and key terms? Stop what you're doing for a few minutes and take this brief quiz to ensure you have a strong understanding of supply chain management basics and the key terms including logistics, supply chain traceability, inventory management and risk management, to name a few. Next StepsWhat's the difference between SCM and CRM? Dig Deeper on Supply chain and manufacturing
You may not think of Napoleon Bonaparte as a logistician. But his axiom that “an army marches on its stomach”—that is, keeping forces well-provisioned is fundamental to success in war—launched logistics as a field of military concentration. Today, the term “logistics” applies to the reliable movement of supplies and finished products. According to a Statista study, U.S. businesses spent $1.63 trillion on logistics in 2019, moving goods from origin to end-user through various supply chain network segments. By 2025, a total of 5.95 trillion ton-miles of freight will move across the United States. Without efficient logistics, a business cannot win the profitability war. What Is Logistics?While the terms “logistics” and “supply chain” are sometimes used interchangeably, logistics is an element of the overall supply chain. Logistics refers to the movement of goods from Point A to Point B, which entails two functions: transportation and warehousing. The overall supply chain is a network of businesses and organizations working in a sequence of processes, including logistics, to produce and distribute goods. Video: What Is Logistics?
What Is Logistics Management?Logistics is the collection of processes involved in moving goods internally or from buyer to seller. Logistics managers oversee and control the many complexities involved in that process; in fact, there are a number of certifications for these professionals. Success depends on attention to many details: Routes need to be determined based on expediency, regulatory environments and avoiding obstacles ranging from road repairs to wars and adverse weather conditions. Shipping provider and packaging options must be carefully considered, with costs weighed against factors from weight to recyclability. Fully loaded costs may include factors outside of transportation, such as those that ensure customer satisfaction and the availability of suitable warehousing. If a shipment of dairy products arrives spoiled because refrigeration failed, that’s on the logistics team. Fortunately, logistics management software helps businesses make the very best routing and shipping decisions, contain costs, protect investments and track the movement of goods. Such software can often also automate processes, such as choosing shippers according to rate fluctuations or contracts, printing shipping labels, automatically entering transactions in ledgers and on the balance sheet, ordering shipper pickups, recording receipts and receipt signatures and helping with inventory control and other functions. Key Takeaways
Business and Management Logistics ExplainedBusiness logistics refers to the entire set of processes involved in moving goods, whether from a supplier to a business or from a business to a customer. The key concept here is managing these processes as a unified system. For example, online retailers that successfully drop ship products direct to customers from hundreds or thousands of small suppliers have advanced business logistics practices. A logistics management system underpins that effort and includes inbound and outbound transportation management, warehouse management, fleet management, order processing, inventory control, supply and demand forecasting, and managing third-party logistics (3PL) service providers. Importance of LogisticsLogistics centers on the movement of goods, but its effects extend much further. In business, success in logistics translates to increased efficiencies, lower costs, higher production rates, better inventory control, smarter use of warehouse space, increased customer and supplier satisfaction, and an improved customer experience. Each of these factors can significantly move the needle on a company’s success. Note that logistics also extends to managing returns to extract the most revenue from these goods. The Role of LogisticsThe very essence of a business is to exchange goods or services for money or trade. Logistics is the path those goods and services take to complete the transactions. Sometimes goods are moved in bulk, such as raw goods to a manufacturer. And sometimes goods are moved as individual disbursements, one customer at a time. No matter the particulars, logistics is the physical fulfillment of a transaction and as such is the life of the business. Where there is no movement of goods or services, there are no transactions—and no profits. There are seven pillars of effective logistics:
3PL (third-party logistics) partners are outsourcers that handle warehousing, fulfillment and returns of certain goods for a fee. Inbound logistics refers to purchasing and arranging the transportation of products, parts, materials and finished inventory from suppliers to a company’s warehouse or manufacturing plant. Outbound logistics refers to the flow of items through a company’s production line, warehouse and ultimately to the customer. Logistics vs Supply Chain ManagementLogistics deals with the movement of goods from a single company’s perspective, meaning the movement of materials and goods one company receives and manages internally as well as when it moves those goods to a customer. A supply chain is a network of businesses involved sequentially in the production or distribution of goods or services. In short, logistics is generally a one company issue while the supply chain is a multi-company issue. While logistics may be coordinated throughout part of or even the entirety of the supply chain, each segment is the responsibility of one entity until it hands off the material or product to another entity in the supply chain. Logistics Components In its most basic form, logistic components are:
Typically, a logistics management system includes inbound and outbound transportation management, warehouse management, fleet management, order processing, inventory control, supply and demand forecasting, and management of third-party logistics service providers. Examples of LogisticsLogistics best practices vary depending on the nature of the business and its product decisions. Consider the variances in the following examples. A manufacturer bases its business model on a just-in-time inventory management system that aligns receipt of raw materials with production schedules so there is little need to pay for storage and a company’s capital is continuously freed for reinvestment. Its logistics priorities include demand planning, selecting suppliers that consistently deliver on time and on budget, fast intake of materials upon arrival and efficient material handling. Once final goods are manufactured, priorities shift to packaging the finished product and transporting it to distributors, wholesalers, retailers or other customers. Manufacturers need to manage true end-to-end logistics from procurement to receipt to manufacturing to packaging, storage and transportation to a buyer. If the manufacturer has a direct-to-consumer model, it may use a supply chain as a service provider to get its products to the end customer. In the second example, a boutique clothing store orders stock from designers and manufacturers. Finished goods arrive at the retailer’s main distribution warehouse for intake. The items are first unitized—broken down from bulk commercial packaging to individual consumer packages. Barcodes are added, then items are sorted, packaged and shipped to the store or a nearby warehouse. Logistics for the retailer begins with intake of goods and continues through the movement of those goods to their final destinations, which in this case is a brick-and-mortar store, not the final customer. In a second retail scenario, some or all of the goods are sent to an order-fulfillment center, where they are processed and shipped to the end customer, who likely made the purchase online. In this scenario, logistics entails the retailer receiving the goods it ordered from suppliers, unitizing them and storing them in the fulfillment center’s storage onsite to be sorted per customer order and then shipped by a third-party logistics supply company, such as UPS, FedEx or USPS. In a third scenario, the retailer redistributes its in-store inventory to other stores where demand for the product is higher to avoid discounting and taking a hit to profits. Or, the retailer may know from its analysis that demand is sluggish everywhere for certain products. In that case, the more quickly it marks the stock down or sells to a retail discounter at a reduced bulk price the more likely it is to recoup much of its investment. Logistics in this scenario entail inventory control, demand planning, pulling, packing and shipping products between stores, moving some items to sales racks, and shipping a bulk distribution in a transaction with a third-party seller. If the retailer declares some remaining product as too costly to sell, because demand is too low at any price, then logistics would also include transport of these items to a charity for a tax write-off. If some of that product is also damaged, the retailer’s logistics manager would transport it to a disposal site. 6 Benefits of Logistics ManagementGiven that the movement of goods is what drives cash flow, it stands to reason that managing that movement—logistics management—is a core business concern. Indeed, logistics management impacts a company’s bottom line for better or worse. It’s best not to leave that impact to chance. The following are six major benefits of effective logistics management.
7 Rs of LogisticsThe Chartered Institute of Logistics and Transport, an international organization for supply chain, logistics and transport professionals, defines the seven Rs of logistics as “getting the right product, in the right quantity, in the right condition, at the right place, at the right time, to the right customer, at the right price.” And in truth, that is the goal of logistics management.
4 Areas to Get Started With Business LogisticsSuccessful logistics is equal parts strategy and planning. Your strategy should encompass tactics to make the movement of goods work in your favor. Your plan should outline all the steps your company will need to take to bring your strategy to life.
How ERP Benefits LogisticsEnterprise resource planning software (ERP) integrates a variety of applications that together constitute the flow of information within the company. This happens to also make ERP a powerful logistics tool as it enables effective order fulfillment. Three top areas where ERP benefits logistics are inventory control, staff management and product distribution. For example, fleet operators can manage asset distribution and maintenance based on information, such as work orders and parts inventory, pulled from ERP systems and feed that data back into the information flow as tasks are completed. Similarly, inventory control and supply chain insights can be automatically routed to reports, such as ledgers and the balance sheet, purchasing reports and automated ordering, and fleet and employee scheduling. Transportation and logistics are central to your company’s success as it is the physical manifestation of transactions and without transactions there is no business. Managing logistics is also critical to the company’s financial health in that it can add or subtract money from the bottom line. Using software such as RPA, ERP, warehouse management, supply chain management, and others, a company can add efficiencies, cut costs and gain control over this important business aspect. Why is there an increased importance of logistics?In its simplest form, logistics is important because it is needed to supply raw materials, goods and equipment to both the maker and the consumer. The manufacturer isn't a logistician and neither is the consumer; and both need the logistics middle man to deliver what they need.
Which of the following is the importance of logistics?Importance of Logistics
In business, success in logistics translates to increased efficiencies, lower costs, higher production rates, better inventory control, smarter use of warehouse space, increased customer and supplier satisfaction, and an improved customer experience.
What are the 4 components of logistics?There are five elements of logistics:. Storage, warehousing and materials handling.. Packaging and unitisation.. Inventory.. Transport.. Information and control.. What are the 4 functions of logistics operations?Main components. Demand planning. To guarantee customer order fulfilment, demand planning is an essential logistics function. ... . Storage and materials. Because demand is unpredictable, it's important to have surplus goods on standby until consumers demand them. ... . Inventory management. ... . Transportation management. ... . Control.. |