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What is Logistics Management, and Why is It Important?

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In today’s 24/7 environment, immediate gratification is the norm. Apps offer everything we want at the tap of a thumb. Walmarts are open all night. And next-day shipping options are becoming more popular by the day.

For businesses, all this is putting more strain on their logistics than ever before. In order for a company to be successful, it needs to know how to navigate this new world by successfully managing its supply chains to meet the ever-higher standards of the modern consumer. It’s why effective logistics management is a must for any business.

What is Logistics Management?

In a nutshell, logistics management is simply the coordination and execution of efficiently transporting goods and materials. This definition doesn’t convey the far-reaching impacts that logistics has on a business, however. More than just the last-mile delivery to a retail customer, logistics can impact nearly every aspect of the manufacturing process, from inbound loads of raw materials to outbound shipments of final goods. 

Though the exact process takes on a different shape depending on business, industry, size, and so on, the basic question posed by logistics management is something all companies will need to answer: how do you send and receive goods and materials in the most efficient possible way to reduce costs, please customers, and streamline operations?

What’s the Difference Between Supply Chain Management vs. Logistics Management? 

Logistics manager on the factory floor

Anybody can conjure up a plan to try and move goods from A to B. But doing so in a scalable way that maximizes the efficiency of your operation is another story entirely. Great logistics management is a delicate dance that involves coordinating and synchronizing multiple moving parts of a business – and usually outside suppliers as well – into a cohesive, reliable, smooth-running machine. 

This might sound like supply chain management, and there are certainly some parallels between the two concepts. However, they’re not quite one and the same. The biggest differentiator between supply chain management vs. logistics management? Scope. Supply chain management deals with the entire manufacturing process. Leaders in this space are as worried about logistics as they are about selling, buying, and producing goods and materials. Logistics management, meanwhile, is purely focused on the transportation and storage part of the equation: warehouse and distribution center storage, shipping, trucking, and the overall movement of product.

In a company hierarchy, logistics management would nest under supply chain management, as it makes up a core component of that broader term. Other specialized teams would fall under supply chain management as well, such as fleet management and inventory management, among others.

What are the Main Elements of a Successful Logistics Management Plan?

Because logistics is such an encompassing term – it could accurately be used to describe anything from moving raw materials between warehouses to getting a final product to the customer – there are numerous factors to consider when it comes to effectively managing the large-scale movement of different goods and materials. Let’s consider some of the most important elements of a successful logistics management plan:

Automation and Technology

Today’s advanced digital tools are a godsend for companies trying to do anything at scale. Across all facets of an organization, what was once tedious manual labor has now become the chore of computer programs and other digital tools. Thanks to warehouse automation and other tools, accuracy has improved, error rate has fallen, costs are down, and processing speeds are up dramatically – what may have taken hours by hand can often be done in minutes by a computer. In other words, saying that digitization has dramatically improved efficiency would be an understatement. 

An easy example of a technological solution to the problem of modern logistics is a warehousing barcode solution. Though it looks like little more than a large-scale UPC found on a retail item, warehousing barcodes are state-of-the-art tracking systems that allow you to precisely determine the quantity and location of just about any stored product. Consisting of a variety of types of rack labels, signs, floor labels, container and tote labels, and more, warehouse label solutions streamline the flow of traffic through a warehouse, making it easy to locate specific locations within the building and pinpoint an item’s storage location. They also help to improve the efficiency and accuracy of inventory counts and overall inventory control. Implementing such a labeling solution can reduce mispicks by warehouse workers and simplify moving the correct goods to the correct trucks without worry – a key element of successful logistics management. 

By incorporating tools like these into your logistics plan, you can cut down on time-consuming tasks, save money, and reduce the time necessary to move products between destinations. You’ll enjoy more streamlined, faster-paced operations without any reduction in logistics quality or reliability, allowing you to match and maybe even outdo customer expectations in delivery and turnaround time.

Strategic Warehousing

When you can shrink the distances that goods and services must travel, you’re building a more reliable logistics network that’s less likely to be affected by disruptions that can be as simple as a traffic jam or as geopolitically complex as a foreign war. And while you may not have much say on where your suppliers are and how they get goods to your facilities, you can ensure that your own factories and warehouses are located in strategic locations to cut down on travel time as well as the distance between your finished product and final customer.

Different companies take different approaches to this. Ford’s famous River Rouge plant was known for handling nearly every fact of automotive production in-house, including the smelting of the ore that became automotive fenders and doors. These days, Amazon has built massive fulfillment centers throughout the country so it can offer two-day shipping to just about anyone in the Lower 48.

These two very different solutions for two very different companies reflect the same philosophy: strategically aligning operations to reduce logistics complexity, cut costs, and ultimately fulfill customer wishes related to product availability and delivery.

Fleet Management 

Integral to a well-run logistics program is a flawless fleet management system. Fleet management is the art of maintaining, organizing, and streamlining the operation of your vehicle fleet. That means ensuring your trucks are road-worthy, safe, compliant, and running the most efficient routes at the most optimal times for effective transport.

There are plenty of elements that go into delivering on this, including proper fleet maintenance and efficient fleet routing. But because so much product is ultimately traveling by truck for some point of its journey – if nothing else, it has to at least be trucked to the dock, railyard, or airport – a lot rides on the fleet managers. Too much or too little product going in or out of your factories will quickly result in nightmarish shortages or overages, both of which will bottleneck production and likely delay customer shipments.

Find the right equilibrium with your fleet and you’ll be well on your way to optimizing both your logistics plan and your supply chain.

Why is Logistics Management Important?

Proper logistics management is critical for any modern company. After all, it concerns the literal moving parts of your business – let the logistics flounder and the whole operation becomes, at best, costly and inefficient. At worst, it grinds to a halt.

But when you get it right? The benefits are manifold: money is saved, efficiencies are found, operational costs are driven downward, and both revenues and customer satisfaction are almost sure to rise. You’ll be able to enhance productivity and maximize the capabilities of your staff and production facility without significant additional investment. 

In short, having an effective logistics management plan allows you to grow your business as you focus on what you do best: delivering the ultimate product or service you can to your customers – and keeping them happy even in this era of instant gratification.

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