BUSINESS LOGISTICS IS IMPORTANT TO EVERY ORGANIZATION, REGARDLESS OF SCOPE, INDUSTRY, OR SPECIALTY. LEARN MORE ABOUT HOW FLEET MANAGERS CAN BETTER LEVERAGE LOGISTICS MANAGEMENT TO MOVE GOODS AND SERVICES FROM POINT A TO POINT B.
This is the process of transporting goods from a major location, such as a manufacturing warehouse, to their destination. This movement process constitutes modern commercial logistics and makes your logistics business run smoothly.
Logistics and supply chain
What is Logistics and Supply Chain?
Supply chain management and logistics management are two topics that are often used interchangeably, as both concepts are at the heart of running a successful business. While supply chains include every element from production to delivery, logistics is only one element in the larger concept of supply chains.
Let's unravel this question further.
SUPPLY CHAINS ARE NETWORKS OF BUSINESSES, ORGANIZATIONS, AND OTHERS WHO WORK TOGETHER TO PRODUCE AND DISTRIBUTE POPULAR PRODUCTS. LOGISTICS, ON THE OTHER HAND, IS RESPONSIBLE FOR THE SAFE TRANSPORTATION OF SUPPLIES AND FINISHED PRODUCTS FROM SITE A TO SITE B, INCLUDING TRANSPORTATION AND WAREHOUSING.
Logistics also includes two processes:
- Collect data for each process involved in the company's distribution
Allocate resources such as human resources, materials, equipment, and capital to the different steps required to move goods
Although logistics is a concept that is easier to understand than the entire supply chain, don't let its simplicity fool you, logistics plays a huge role in many of these steps to maintain its functionality and benefit the business.
- Business logistics: what it is and how it works
Commercial logistics refers to the workflow and supervision of goods during transportation, whether from supplier to enterprise or from business to customer. The key concept here is to manage these processes as a unified system.
You do not have to manually manage and supervise this process. Logistics management systems can handle inbound elements, such as purchasing and scheduling the transportation of products, parts, materials, and finished goods inventory from suppliers to a company's warehouse or manufacturing plant. Outbound elements, such as the process by which items move through a company's production line, warehouse, and ultimately reach the customer.
Both of these elements require logistics managers to implement other management techniques, such as:
- Transportation management
- Warehouse management
- Fleet management
- Order Processing
- Inventory control
- Supply and demand forecasting
- MANAGE THIRD-PARTY LOGISTICS (3PL) SERVICE PROVIDERS
Logistics management systems can take over these different administrations and automatically collect and process information as needed. Put logistics managers on practical tasks, such as ensuring that transported materials arrive safely and intact, and work to get positive feedback from customers.
How can enterprise logistics management improve profits?
Business logistics management makes logistics the backbone of any business by exchanging goods and services to earn profits and trade for businesses. If there are no economic gains and trade, there will actually be no transactions, no trades, no profits, and ultimately no business.
But if done correctly, enterprise logistics management can make organizations leaner and more profitable over time. Provide broader visibility into the movement of goods and items from production to consumption, identifying infrastructure and operational practices that facilitate or hinder the smooth transportation and distribution of goods
Although the process is smooth, it can show cracks in the current workflow of any business. It can also inform employees which aspects of their responsibilities are handled well and which areas require a new or updated system. To ensure that "cracks" no longer occur, a set of inbound and outbound domains should be followed to ensure efficient logistics handling.
The seven pillars of effective logistics
- Material procurement
Material sourcing is not just about finding the cheapest supplier of raw materials. Logistics includes calculating and managing factors such as late delivery delays, additional service costs, additional costs, increased transportation costs due to distance or regulatory environments, and warehousing costs.
Going the extra mile to find the right supplier for any material also requires an understanding of how these factors will affect overall operating costs. This process is known as "strategic sourcing".
Fleet managers should pay special attention to this component of logistics planning, as it is at the heart of logistics management.
In order for transportation to play a role in logistics planning, first of all, companies need to choose the best mode of transportation – there are only three freight options: air, water or land. They then select the best carriers based on cost, speed, and distance, including optimizing routes that require multiple carriers.
If goods are moving globally, shippers need to understand customs, duties, compliance, and any relevant regulations, while transportation and fleet managers must use dashboard and analytics software to record and track shipments, manage billing, and report on performance.
- Order fulfillment
In order for the item to reach its destination, the right item must be "picked" from the warehouse according to the customer's order, properly packed and labeled, and then delivered to the customer's home or collection location as planned. Once delivered, order fulfillment is created, which is at the heart of logistics sequencing in customer fulfillment.
BOTH SHORT-TERM AND LONG-TERM STORAGE ARE A COMMON PART OF LOGISTICS PLANNING, IN FACT VERY COMMON, SO A NEW PROCESS HAS BEEN CREATED – A WAREHOUSE MANAGEMENT SYSTEM (WMS) – TO HELP LOGISTICS PLANNERS OPTIMIZE WAREHOUSE SPACE BY CONSIDERING THE SPECIFIC CONDITIONS OF PERISHABLE GOODS, AS WELL AS ASKING ABOUT FACILITIES SUCH AS COLD STORAGE, TERMINAL FACILITIES, AND PROXIMITY TO MODES OF TRANSPORTATION SUCH AS RAILWAY LINES.
IN ADDITION, WMS CAN DEDUCE THE GOODS THAT ARE PLANNED TO BE SHIPPED AND PLACED IN FRONT OF THE WAREHOUSE. AND ITEMS WITH LOWER DEMAND ARE STORED IN THE BACK. PERISHABLE GOODS ARE OFTEN ROTATED, SO THE OLDEST GOODS ARE SHIPPED OUT FIRST TO ENSURE THE EFFICIENT OPERATION OF THE WAREHOUSE.
- Demand forecasting
Logistics meets inventory demand forecasts. This ensures that businesses never run out of high-demand products or materials, nor do they hoard items they don't need. This saves businesses money, time, and products that may expire due to poor sales. By using demand forecasting, logistics managers can determine exactly how much of each product they need and when.
- Inventory management
Based on past trends or seasonal behavior, companies can plan for demand growth for certain products and meet demand according to requirements. In turn, companies can better determine when to offer discounted prices for goods that are not in high demand and incentivize free capital to reinvest in goods with higher demand. This way, they can also maintain higher margins and speed up inventory turnover.
Since stores are different from each other, good inventory management enables businesses to decide to ship products that are underperforming in one store or region to another store or region that is in high demand, rather than losing money by getting rid of inventory with discounted pricing. Or create waste by throwing away the product. Logistics is key to moving inventory to the best possible price.
- SUPPLY CHAIN MANAGEMENT (SCM)
A supply chain is essentially a series of transactions. If logistics fail, supply chains fail and transactions come to a standstill. To better explain, during the pandemic, aisles in multiple countries
What is Transport Logistics Management?
Transportation management is part of logistics management, therefore, it is considered one of the most important aspects of distribution elements and the factor that determines the success or failure of a company.
Since transport and logistics management are very similar, it is not uncommon for them to have the same main goal, which is to move goods efficiently and effectively through a company's supply chain.
The ultimate goal: physical delivery
Transport logistics focuses on successfully moving goods from one location to another. It's one thing to plan for safe, on-time delivery, but it's quite another to cross terrain and deliver physical objects without loss, damage, or attempted theft.
In order to quickly meet the delivery deadline without facing any problems, it is better to know the shipping features. The functions of transportation services can be divided into three important areas:
- Operations management
- Vehicle and fleet organization
- Infrastructure management
- The terrain that best suits your business
Depending on the item being transported by the shipper, the size of the item, and the value of the item, different modes of transport may be appropriate for the item; However, by comparing different terrains, it can be seen that among all the different modes of transport, road transport is the most commonly used popular mode in the freight industry for the following reasons
This is the most cost-effective of all modes of transportation
- You can enjoy fast and scheduled delivery (1-3 days delivery)
- Flexible service
- Easily track freight and fleet vehicles
- Full door-to-door delivery service available
- The most economical means of transportation
Why is proactive management important?
Order fulfillment is just one of the many aspects of transportation and logistics management. There are several other reasons why it's crucial to take initiatives in this area of your business. As mentioned above, transportation management is critical to the success of the entire supply chain and business.
Let's take a closer look at a few reasons to support proactive management:
Optimize inventory processes
When you effectively manage transportation logistics, your entire supply chain runs smoothly. This will allow you to keep an eye on your inventory and manage it accordingly, especially if shipping technology is used. As a result, your warehouse will be more operationally efficient, lead times will be shortened, and storage costs will be reduced.
Another benefit as your approach to logistics becomes leaner and uses the terrain that best suits your business practices, another benefit is a reduced carbon footprint. The transportation industry is known for "emitting big," so every small step to reduce emissions is worth celebrating.
In addition, efforts to reduce air pollution will appeal to customers who want to work with companies that take their social responsibilities seriously. Optimizing your shipping processes will simultaneously reduce your environmental impact while increasing customer satisfaction.
Some significant benefits of logistics management
- Increase visibility
With business logistics management, logistics managers can gain a strategic, more precise view of the distribution and transportation process. It is important to pay attention to the steps taken in the initial stages of product creation, such as front-end design, testing, and product production. While these are vital processes that are critical to consolidating a brand's market share, they should not take up time to push products into a company's supply chain in a timely, efficient, and cost-effective manner.
- Reduce costs
Intelligent enterprise logistics planning helps logistics managers cut many previously overlooked transportation and warehousing expenses. Through programs such as fleet management software, inventory management, and demand forecasting, businesses can customize more strategic inbound and outbound transportation schedules, routes, fleet vehicle maintenance, and more. This way, managers can distribute the money saved by efficient spending and saving methods elsewhere.
The main indirect costs reduced through commercial logistics work include:
– Storage and inventory holding calculations
– Purchase costs
– Cost per unit of production
– Expenditure on fixed assets, such as warehouses, vehicles, etc.
Total supply chain spend
At the same time, commercial logistics is constantly improving:
– Cash flow
– Order fulfillment rate
– Delivery time
– Net profit
- Improve customer experience and customer satisfaction
Of all the different options for businesses to deliver their products, most customers prefer home delivery. With this delivery option, customers can enjoy a secure payment method, quality goods or services upon arrival, and save on fuel and travel costs to the nearest delivery location.
To better meet the needs of our customers, the delivery process should be a quick and straightforward experience, and as a customer, there is nothing worse than not knowing where your package is or when it will arrive. Timely and punctual arrivals, well-organized communication channels, and intact shipments are key factors that influence customer satisfaction and guarantee positive feedback on the overall delivery service.
When your organization fails to meet these delivery expectations, customer satisfaction can be greatly reduced. However, logistics managers can prevent this from happening with the help of commercial logistics.
- Increase profits
Efficient logistics management provides you with reliable transportation and business insights into operations and customer relationships. This information can then be used to improve order fulfillment rates and thus profits. With fleet management software, fleet data, route optimization, and other management programs such as active vehicle tracking, managers can minimize operational costs and ensure supply chain synchronization.
What is the impact on fleet management?
Poor logistics planning will, at best, temporarily affect a company's bottom line. In the worst case, it can cause considerable damage. Since logistics is seen as the physical manifestation of a transaction, without logistics, cash flow cannot be transferred from the buyer to the seller, resulting in production stoppages and huge losses of products and profits, ultimately leading to poor customer satisfaction and a decline in sales among customers.
Fortunately for businesses, managers can use logistics management software to help businesses and fleets make the best decisions, such as calculating optimal route and transportation decisions, controlling costs, protecting investments, and tracking the flow of goods.
Logistics best practices vary depending on the nature of the business and its product decisions, but the process is always complex. Automation is the key to efficiency. The software can also often automate processes such as:
- Choose shippers based on rate fluctuations or skills
- Print shipping labels
- Transactions are automatically entered into the financial ledger and balance sheet
- Order shipper pickup
- Record receipts and receipt signatures
- Help with inventory control
- This software can do a lot of work in no time. Modern logistics management, aided by technologies such as artificial intelligence (AI) and the Internet of Things (IoT), enables managers to find new revenue streams and increase delivery profitability. Of course, these goals can be achieved without the use of technology, but these methods allow companies to achieve higher standards of logistics management and delivery efficiency.
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