Logistics deals with the planning and the control of material flows and related information in organizations which is why having an amazing logistics team to handle your products would make your company flourish.
Their mission is to get the right materials to the right place, at the right time while satisfying given sets of constraints and satisfying both the customer and business owners. So, what are the key activities in logistics?
What are the 3 main activities of logistics systems?
- Order Processing
This is strictly related to the information that flows in the logistics system, which includes several operations. Customers’ orders are transmitted, checked, and verified. After that is done, the item is retrieved from the stock, packed, and then delivered with their shipping documentation. While the whole process is happening, the customer is being kept informed about their order status and where it is now.
This process used to be time-consuming, but slowly as years go by, it becomes faster due to the advancements of technology and electronics. The bar code scanning allows the retailers to easily identify the required products and update the inventory without having to do too much paperwork hence saving time and being organized.
- Inventory Management
This is the key issue in logistics system planning and operations. Holding an inventory can be expensive, but it helps you keep track of all your products and materials.
There are many reasons why a logistician wishes to hold inventories in some facilities:
- Improve service level: This is when you have a stock of finished goods in warehouses that are close to the customers yield shorter lead times.
- Coping with randomness in customer demand and lead times: Safety stocks help in satisfying the customer damned, even if some unexpected peaks of demand and delivery days occur.
- Overcoming inefficiencies in managing the logistics system: Inventoried may be used to overcome inefficiencies in the management of the logistics system.
- Reducing overall logistics cost: Frequent delivery of small orders over a long distance, so it is much easier to save money to get a warehouse.
- Making seasonal items available throughout the years: Seasonal products can be stored in warehouses and sold in the subsequent months.
- Speculating on price patterns: During the year, prices of the merchandise varied throughout the year. When the price is low at that time of the year, they store it at a warehouse and bring it out once the price is high once again.
- Freight Transportation
Freight transportation plays a huge role in today’s economy. It allows the production and consumption to take place in locations that are hundreds and thousands kilometers away from each other. It makes the market wider, stimulating direct competition among manufacturers from different countries and it encourages companies to exploit their economies of scale.
Functions of Logistics
The following are a few functions and elements of logistics:
- Order Processing
This is the purchase order placed by a buyer to a supplier, which involves important legal documents of the transactions between both parties. It incorporates the description and technical details of the product to supply, price, payment terms, taxes, and the like.
- Inventory Control
The job of an inventory manager is to keep enough inventories to meet the customer requirements while making sure that the carrying cost is at its lowest. The inventory is the biggest culprit in the overall supply chain of a firm since they have a huge carry cost and indirectly eat away the profits.
This is the movement of goods from the supplier to the buyer which is the most fundamental component of logistics.
This is where they store the finished goods until they are sold. The major decisions in warehousing include locating the warehousing facilities, warehouse layout, ownership of the warehouse, number of warehouses, size of the warehouse, and the design of the building. Having improper warehouse management could greatly affect your business.
- Logistics Packaging
Logistical packaging plays an important role in damage protection, if your package is packed neatly and securely, then it would be able to travel without breaking or ripping.
- Material Handling and Storage System
The speed of the inventory movement from point A to point B depends on the material handling methods. If you are not responsible for handling the product, the customer would receive damaged products and that is not good for your company.
Logistics and transport management is important in establishing your own business and that is something that you should surely invest in because it would help you in the long run. Your logistics coils make or break the success your company is facing.