Introduction
Logistics refers to the process of coordination and movement (forward and reverse) of resources from the point of origin to the point of consumption in the supply chain. The term “logistics” can be traced back to Roman and Greek times, referring to the movement of equipment and supplies to troops in the field. Logistics is a crucial component of supply chain management and involves planning, transporting, and storing goods.
The global logistics market is projected to reach USD 12,975.64 billion by 2027, registering a CAGR of 6.5% from 2020 to 2027. Factors such as the booming e-commerce industry, reverse logistics, last mile logistics, rise in tech-driven logistics services, and increased global trade have contributed to this industry's growth. Supply chain management courses offer in-depth knowledge and hands-on experience in all areas of the supply chain management process and make professionals capable of handling the day-to-day activities of an organisation.
Importance of Logistics in Supply Chain Management
The efforts to design and manufacture a product per customer demand would all go to waste if the product did not reach the customer at the right place and time. This is where logistics plays an important role in supply chain management. Logistics in the supply chain can involve functions such as order processing, fleet management, warehousing, materials handling, order fulfilment, inventory management, and demand planning. Effective logistics management involves integrating all these functions for smooth working to ensure increased productivity and customer satisfaction while keeping low operational costs.
A logistics failure would lead to the eventual collapse of the entire supply chain. Logistics management helps organisations respond quickly to market or customer requirements changes, enhances visibility, ensures better management of resources, and gives a competitive edge.
6 Major Types of Logistics in Supply Chain Management
The field of logistics can be differentiated based on services performed in the supply chain. It is a complex process involving various steps before the product reaches the right customer at the right time. Various logistics are involved in the supply chain, ensuring order fulfilment and deliverables are met to guarantee customer satisfaction.
1. Inbound Logistics
Inbound logistics involves the management of resources that are necessary to make a product or service of an organisation. It involves managing different suppliers/vendors, inventory, costing, and transportation. Inbound logistics must ensure the right resources in quantity reach the organisation at the right time. It is a complex process requiring connecting with various resource providers to make one final product. Inbound logistics is mainly concerned with the movement of resources from suppliers to production.
The logistics companies plan to effectively manage the inbound logistics using order-fulfilment technologies or automatic ordering. Additionally, you may anticipate that this integration will strengthen your organisation's strong points. For example, if your factory produces auto parts, you must ship them to customers or recipients like manufacturers to use them on the finished goods.
Transferring the raw materials to the appropriate departments or manufacturers for additional processing is the responsibility of inbound logistics. Transporting these unprocessed raw materials typically involves using large vehicles. To move goods safely and affordably, logistics companies have a broad network and trucks. To prevent impeding the subsequent operations, improving process flow at this stage of the logistics value chain is crucial. For a hassle-free logistics service, pick the best logistics provider. You can get assistance from Trans Asia Group with an effective inbound logistics setup.
2. Outbound Logistics
Outbound logistics refers to delivering the right product at the right time to customers at the best possible minimum cost. It focuses on the demand side of the supply-demand calculation. Customer satisfaction is the main objective of outbound logistics. It is concerned with delivering the product from the distribution centre to the customer. It involves procedures such as order processing, packaging, and shipping to the destination.
To put it simply, outbound services allow enterprises to ship and transport their specified products from warehouse storage to the client's door. For end, consumers to track the progress of their package, various tracking options are provided. Customers expect their goods or products to be delivered promptly and safely. Thus, extra care should be given since outbound logistics play a significant role in establishing the reputation of enterprises.
Employ logistics firms like Trans Asia Group for your enterprises since, depending on the region, they provide outbound logistics with same-day delivery. Trans Asia will deliver your order on schedule, so you can rely on them.
3. Reverse Logistics
Reverse logistics is the process connected with managing product returns and refunds. It is the movement of the product from customers back to the seller or manufacturer. The products returned may be received late or not required by the customer, damaged in the delivery process or eligible for repair, refurbishing, or recycling. Reverse logistics helps organisations properly dispose of products that can minimise penalties for noncompliance with environmental regulations.
4. Procurement logistics
Procurement logistics is sourcing materials/services required to manufacture a product. Procurement is the major element in inbound logistics, and the scope depends on the size and nature of procurement required by an organisation. Procurement logistics aims to control supplies as per the requirement of the various operational processes of the organisation. It involves monitoring quantities to be supplied, supply frequency, inventory management, demand forecasting, quality of service delivery, vendor selection, types of packing required, and mode of transportation required, among other factors.
5. Manufacturing logistics
Manufacturing logistics refers to the planning, coordination, and service tasks required to carry out production activities within a manufacturing plant. It is organising and managing the transportation, storage of materials and finished products within a manufacturing plant. It also includes determining when to shut down the manufacturing plant for maintenance, managing inventory levels, and meeting production schedules.
6. Distribution logistics
Distribution logistics, also known as sales logistics or transport logistics, deals with the movement of goods from manufacturer to customer. Customers can either be final customers or distributors. This logistics is the driving force behind order fulfilment services. Supply chain management online courses enable professionals to learn more about the processes and methods to run a lean and efficient supply chain management.
The Role of Logistics
Logistics services can be simple and complex at the same. It plays a determining role in successful order implementation. Let's find out more about these roles:
Order processing
The logistics department is responsible for processing all the orders placed by the customers. It is essential for a fast and effective flow of information that surrounds the delivery process.
Inventory management
Inventory involves stocking finished goods in a warehouse or storage facility. Inventory control and maintenance are required to support the transportation and delivery processes. The stocked goods should be stocked according to the demand or future predictions. Above all, they should be kept safe.
Warehousing
Warehousing is an extension of inventory management. Unlike inventory, warehousing is limited to tracking stock movement within a warehouse and not all locations. Operations take place on the individual warehouse level.
Packaging
Packaging includes all the activities that ensure the safety and quality of goods transported and delivered to the customers. It is vital as several people would handle the products and store them under various circ*mstances. It is one of the factors that determine delivery success.
Cargo handling
Handling packaged goods form the basis for safe and timely delivery. Logistics services must have an effective package and handling procedures. Customers should be delivered products of desirable quality. The procedures for return are quite extensive, and returns due to damaged products can result in a bad reputation.
Transportation
Transportation is required at different stages and types of logistics services. A company's transportation system defines the success of its supply chain management system. A few steps to increase the transportation system include a shipper's portal, route optimisation with Estimated Time Arrival (ETA), customer notifications and live tracking, analytics, and proof of delivery.
Conclusion
The prompt and efficient handling of the material procurement process, transportation, storage, and supplying the end product to the customer directly contribute to higher profits for a business and help sustain customer satisfaction. With the aid of modern technology, logistics can adopt proactive measures to forecast demand and enhance fulfilment services. Technology will also help organisations to adopt green logistics, which will go a long way in reducing the environmental impact of logistical activities.
