Business logistics matters to every organisation, regardless of the scope, industry or specialisation. Read more on how fleet managers can better utilise logistics management to transport goods and services from point A to B.
This is the process of transporting goods from one primary location, such as a manufacturing warehouse, to their destination. This process of movement makes up contemporary business logistics and keeps your logistics business running smoothly.
Supply chain management and logistics management are two topics often used interchangeably because both concepts are central to running a successful business. While the supply chain includes every element from production to delivery, logistics is only one element in the larger concept of the supply chain.
Let’s unpack this a bit more.
A Supply chain is a network of businesses, organisations and other people working together to produce and distribute popular products. Logistics, on the other hand, handles the safe movement of supplies and finished goods from location A to B, this includes transportation and warehousing.
Logistics also includes two processes:
Although logistics is a simpler concept to understand than the overall supply chain, don't let its simplicity fool you, logistics has a huge role to play with many steps within it to keep it functional and beneficial to the business.
Business logistics refers to the workflow and oversight of goods in transit, 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.
You don’t have to manage and oversee this process manually. A logistics management system can take care of inbound elements like purchasing and arranging the transportation of products, parts, materials and finished inventory from suppliers to a company’s warehouse or manufacturing plant. And outbound elements like the flow of items through a company’s production line, warehouse and ultimately to the customers.
Both these elements would need the logistics manager to implement other management techniques such as:
A logistics management system can take over these different management departments and automatically gather and process information as needed. Leaving logistics managers with practical tasks such as making sure the supplies being transported arrive safely and intact, and striving to attain positive feedback from customers.
Business logistics management gains profit and trade for the business, by exchanging goods and services, making logistics the backbone of any business. Without financial gain and trade, there would be virtually no transactions taking place, no deals, no profits and ultimately, no business.
But when done right, business logistics management can make organisations leaner and more profitable over time. Granting broader visibility over the movement of goods and items from production to consumption, identifying infrastructure and operational practices that help or hinder the smooth transportation and distribution of goods
As smooth as this process is, it can show cracks in the current workflow of any business. It can also inform which aspects of an employee's duties are handled well, and which require new or updated systems. To ensure no further ‘cracks’ are shown, a set of inbound and outbound domains should be followed to ensure effective logistics handling.
1. Material sourcing
Material sourcing is more than finding the cheapest supplier of raw materials. Logistics includes calculating and managing factors like backorder delays, add-on service costs, extraneous fees, increased shipping costs due to distance or regulatory environments, and warehousing costs.
Going the extra mile to find the right supplier for any material also requires understanding how these factors will impact the overall operation cost. This process is referred to as "strategic sourcing".
Fleet managers should pay special attention to this component of logistics planning, as it is the core of logistics management.
For transportation to contribute and fulfil its role in logistics planning, first, a company needs to select the best mode of transportation - there are only three freight options for shipments: air, water, or land. Then they choose the best carrier based on cost, speed and distance, including optimising routes that require multiple carriers.
If goods are being transported globally, the shipper needs to be knowledgeable about customs, tariffs, compliance and any relevant regulations, while transport and fleet managers have to document and track shipments, manage billing and report on performance using dashboards and analytics software.
3. Order fulfilment
For items to get to their destination(s) without trouble, the right items must be “picked” from the warehouse as per the customer's order, get properly packaged and labelled, and then shipped to the customer’s home or collection location as scheduled. Once delivered, this creates an order fulfilment, which is the heart of logistics sequencing in customer distribution.
Both short- and long-term storage are common parts of logistic planning, so common in fact, that a new process, warehouse management systems (WMS), was created to help logistics planners optimise warehouse space by taking into consideration specific conditions for perishable goods, as well as enquired facilities such as cold storage, docking facilities, and proximity to modes of transportation such as rail lines.
Further, WMS can also deduce goods that are scheduled for transport to be placed at the front of the warehouse. While lower-demand items are stored toward the rear. Perishable goods are often rotated, so the oldest items are shipped out first, ensuring effective warehouse operations.
5. Demand forecasting
Logistics caters to inventory demand forecasting. This ensures the business never runs out of high-demand products or materials and doesn’t stock up on items that aren’t needed. This saves the businesses money, time and products that might expire as a result of poor sales. By using demand forecasting, logistics managers can precisely determine how much of each product they will need and when they will need it.
6. Inventory management
Based on past trends or seasonal behaviour, companies can plan for increased demand for certain products and meet demand when requested. In turn, a company can better determine when to offer discount pricing for items that aren’t in demand and offer incentives for free capital to reinvest in goods that are in higher demand. With this, they can also keep profits higher and make inventory turn faster.
Since stores differ from one another, good inventory management enables the business to decide to ship products that are performing poorly in one store or region to another where the products are in demand rather than take a loss via discounting pricing to get rid of stock. Or creating waste by throwing away the products. Logistics is key to moving inventory where it is likely to get the best price.
7. Supply chain management (SCM)
A supply chain is essentially a series of transactions. If logistics fails, the supply chain will fail, and transactions will come to a standstill. To better explain, during the pandemic, aisles in multiple stores were empty, caused by sudden high demand. While warehouses and farms had amble goods that were going bad and had to be thrown out. The transportation restrictions during that time broke supply chains, and thus stores didn't receive their goods, losing profit in the long run.
If business and transportation logistics were implemented and business owners used demand forecasts beforehand, they could have foreseen the disaster and prepared for the sudden spike in demand.
Transport management is part of logistics management and, as such, It's considered one of the most important aspects of the distribution element, as well as the factor that can make or break a company.
Because transportation and logistics management are so similar, it's not uncommon for them to share the same primary goal of efficiently and effectively transporting goods throughout a company's supply chain.
Transportation logistics focuses on the successful delivery of goods from one location to another. Planning to have a safe and scheduled delivery is one thing, but going through the terrain without loss, damage or attempted theft and delivering the physical items is another.
To swiftly meet delivery deadlines without encountering any problems, it's best to get to know the transportation functions. The function of transportation services can be divided into three important areas:
Depending on what shippers are transporting, how large the item(s) are, and how valuable they may be, different modes of transportation may be appropriate for that item; however, when comparing the different terrains, it is stated that out of all the different modes of transportation, road transportation is the popular mode frequently used by the freight industry, here’s why:
Order fulfilment is only one of the many aspects of transportation and logistics management. There are several other reasons why it’s crucial to be proactive in this area of your business. As seen above, transportation management is a huge deal in the overall supply chain and the success of a business.
Let’s take a closer look at a few reasons that support active management:
Optimisation of inventory flows
Your entire supply chain can run smoothly when you manage your transport logistics effectively. This will allow you to keep a close eye on inventory and manage it accordingly, especially if transportation techniques are used. As a result, your warehouse's operational efficiencies will be improved, lead times will be reduced, and storage costs will be reduced.
As you become more streamlined in your logistics approach and use the terrain that best suits your business practices, another benefit is reducing your carbon footprint. The transportation industry is known for being a bit ‘emissions-heavy’ so every little step towards decreasing emissions is one to be celebrated.
Moreover, striving to lessen air pollution will draw in customers that want to work with companies that take social responsibility seriously. Optimising your transportation process will simultaneously reduce environmental impact while increasing customer satisfaction.
1. Increases visibility
With business logistics management, logistics managers have the advantage of seeing the distribution and transportation process through a strategic, more precise lens. It’s important to note the steps taken in the primary stages of product creation, such as front-end design, testing and production of its goods. While these are vital processes and essential to solidifying brand market share, they should not take time away from pushing the products through the business’s supply chain in a timely, efficient and cost-effective way.
2. Reduces costs
Smart business logistics planning helps logistics managers trim costs on many previously overlooked transportation and storage expenses. Through programs like fleet management software, inventory management and demand forecasting, businesses can tailor far more strategic inbound and outbound shipping schedules, routes, fleet vehicle maintenance and more. With this, managers can use the money saved through the efforts of effective spending and money-saving methods to be distributed elsewhere.
Key overhead costs reduced through business logistics efforts include:
All the while, business logistics improve:
3. Improves customer experience and increases customer satisfaction
Out of all the different options a business has for delivering their products, most customers favour door-to-door delivery. With this delivery option, customers can enjoy safe payment methods, quality of a good or service upon arrival, and save up on fuel and travelling expenses to the nearest delivery location.
To better cater to the customer, the delivery process should be a swift and straightforward experience, as a customer there's nothing worse than not knowing where your parcel is or when it will arrive. Prompt and on-time arrivals, clear communication channels from the organisation and intact, undamaged cargo are key factors that impact customer satisfaction and guarantee positive feedback on the overall delivery service.
When your organisation fails to meet these delivery expectations, customer satisfaction can greatly decrease. Logistics managers, however, can prevent that from happening with the help of business logistics.
4. Increased Profit
Efficient logistics management gives you credible transport and business insight on operations and customer relations. The information can then be used to increase the order fulfilment rate which can boost profit. With the aid of other management programs, such as fleet management software, fleet data, route optimisation, and active vehicle tracking, managers can minimise operational costs and ensure supply chain synchronisation.
At best, poor logistics planning will temporarily affect a company's bottom line. At worst, it could be quite damaging. Since logistics are seen as the physical manifestation of a transaction, without them, cash flow can't move from buyer to seller, resulting in a halt in production and a staggering loss in products and profit, ultimately leading to poor customer satisfaction and a decrease in customers.
Fortunately for the business, managers can use logistics management software to help make the best decisions for the business and fleet, such as calculating the best routing and shipping decisions, containing costs, protecting investments and tracking the movement of goods.
Logistical 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. This software can often also automate processes, such as:
This one software can do the job of many in no time. Modern logistics management, aided by technologies such as Artificial Intelligence (AI) and the Internet of Things (IoT), enable managers to find new revenue streams and increase delivery profitability. Sure, these objectives can be met without the use of technology, but these methods allow businesses to achieve higher standards of logistics management and delivery efficiency.
Have Cartrack's user-friendly, fleet management tools readily available to help in the management of your business and transportation logistics as soon as you open our app. To further optimise your business practice, visit our website and let’s get started.