Logistics is an essential component of supply chain management. It involves the planning, carrying out and management of goods, services and information from the point of origin to the point of consumption. Logistics aligns the complex pattern of traffic and transportation, shipping and receiving, import and export operations, warehousing, inventory management, purchasing, production planning and customer service. Companies see logistics as a critical blueprint of the supply chain. It is used to manage, coordinate and monitor resources needed to move products in a smooth, timely, cost effective and reliable manner.
As the global economy moved into the 21st Century, logistics became a critical part of supply chain management and consumer demand. In less than two decades, logistics management has influenced product movement to meet or exceed consumer demand. Companies saw they could lower costs and increase productivity by managing logistics on a system theory and managing the company as a whole to boost performance.
By creating partnerships with suppliers, shipping services and warehousers, and connecting these services through automated systems, the logistics of getting products to the consumer are improved with reduced overhead costs and faster delivery. Understanding how the logistics system theory works requires strategic planning when calculating what will be needed, while focusing on obtaining materials and managing how quickly products are produced to help ensure swift delivery to the consumer.
Simplifying communication and services between multiple departments helps create a workflow blueprint that reduces costs by increasing visibility and improving the overall understanding of company needs. Cost savings is created by reducing warehousing costs and purchasing based on supply forecasts, better inventory management, reliable shipping and timely delivery to the end-user.
You Might Also Enjoy: Dr. David Closs Discusses MSU's Supply Chain Management Program
Today’s world economy is connected through social media and the Internet and has raised customer expectations for faster product delivery. Developing logistics strategies that embrace these expectations requires companies to look at things like the physical location of warehouses and the use of sophisticated software systems to receive purchase requests within a matter of seconds rather than days.
Because customer service satisfaction has become a basis on which companies drive business growth and profitability, using the best transportation system strengthens performance trade-offs to reduce shipping costs and ensure timely delivery of goods. These processes and systems are integral parts of a solid logistics management system, emphasizing the importance of warehousing and transportation for customer service excellence for end-user product delivery.
Logistics within supply chain management is constantly changing to meet consumer demands. Consumers frequently order products using iPods, iPhones, Smartphones and Tablets expecting to receive their product within 24-48 hours. To meet these expectations, companies have to improve the logistics of their supply chain to expedite order fulfillment and quickly ship the item via the most reliable, yet cost-effective and timely means. When companies create a blueprint that outlines the logistics of the supply chain, each component within that logistics model stays focused, reduces costs and moves quickly and efficiently resulting in higher customer satisfaction. Logistics helps companies understand the key metrics, core processes and long-term goals of their supply chain so they can get the right item to the right place at the right time.