Logistics management is complex and fundamental for companies in managing their supply chain. The key components create and enforce consistency in the movement of goods from manufacturer to distributor or consumer. It defines the logistics activities within the supply chain.
Having a deep knowledge and understanding of the key components of logistics management is crucial as the industry changes and pushes for faster and more effective logistics to get a product into the hands of the consumer or distributor.
In order to help improve the process, one must dive into the key components. Here are the five major components of logistics management:
- Planning: storage, warehousing, and materials handling
- Packaging and utilization
- Inventory control
- Information and control
Understanding each element of logistics is a simple and effective way to recognize how logistics activities and processes take part in the supply chain. Let’s take a close look at each.
1. Planning: Storage, Warehousing, and Materials Handling
The market is unpredictable and highly susceptible to the imbalances between supply and demand. Supply can be steady, but the demand for goods from consumers is not. It is directly affected by different factors, making it unpredictable.
Logistics management plays a key role in ensuring a constant and continuous supply of goods from the manufacturer to the consumer. Great planning becomes essential to maintain a healthy supply chain.
During the fluctuation of supply and demand, there can be an insufficient supply of goods or a surplus of goods produced. In such cases, storage units and warehouses become part of the process. Proper logistics planning provides organization and synergy and becomes essential to ensure proper maintenance and handling of the goods.
Planning is one of the most important components of Logistics management. It is essential to assuring all elements of the process are coordinated and implemented successfully. It creates systems and processes to achieve timely delivery of products.
2. Packaging Unitisation
Care and conditioning of the products and goods are essential in the supply chain. Proper handling and storing of products is key in logistics management.
The packaging of the products takes a lot of research. Analyzing the way the goods are stored to keep them at their best quality, and strategizing how the package itself can be handled and processed is part of the research and strategy. In addition, the colors and branding play a big part to ensure the consumer gets a positive experience.
The design, the shape, the material, and even the colors of the packaging are thought out in order to successfully get the product to the right hands in the best condition possible. Packaging protects a product as it is being transported from the manufacturer to the hands of the consumer or distributor.
But when supply and demand fluctuate, that package might need to sit in a warehouse in the process. That goes into the packaging strategy as well. It must maintain and condition the product in such scenarios, without jeopardizing the quality.
Unitisation assists in the storage and transportation of goods and products. Essentially, it is a “grouped or bundled cargo, wrapped into packages and loaded onto or inside a bigger unit”.
The end goal is to fit products and goods in a cube, the easiest shape to transport and store. Packaging and unitisation work together on packing all different shapes and sizes of products and goods into a cuboid shape.
3. Inventory Control
Inventory is closely related to storage and warehousing and is important to ensure consumer requirements are met. It is about controlling the flow of goods and products going in and out of the warehouses. It determines how much stock to hold, where to store, and how much is to be stored.
Inventory management is about predicting the demand of goods by consumers with the help of sales data, mathematical and statistical tools. As previously mentioned, the market varies and can sometimes be unpredictable.
Inventory management is not an exact science, but it is an important logistics element to helping manage the flow of goods through the supply chain. A healthy inventory balance is detrimental to the supply chain and business margins.
Transportation is a complex and costly part of logistics management. It can represent 50 percent of the logistics budget, putting pressure on companies to find the fastest and cost-effective way to get products and goods to the consumers and distributors. Transportation includes various platforms, such as road vehicles, cargo trains, freight shipping, and air transport.
Perishables do not travel far, but many other goods travel from all over the world, adding complexity to the process such as tax codes, customs clearance, and payment methods. All of which must be cleared before the products even leave the warehouse.
Transportation plays a key role in the fast-growing industry of e-commerce. The consumer has high expectations for fast and proper delivery of goods, and even the return of such. When partnering with a 3PL, it is important to work with a company that provides reliable and transparent logistic services to ensure quality and efficiency.
5. Information and Control
Data-driven logistics drive the future of the industry. The flow of information throughout the logistics management process is vital to providing fast and accurate service to the consumer and manufacturers.
From inventory flow to warehouses and transportation, information improves the efficiency and performance of activities in a supply chain.
Information and control improve business efficiency helping in the traditional management processes, but also supporting as a modern tool in achieving strategic goals.
Analyzing and understanding the five components of logics management thoroughly is a constructive business practice as advances continue to shape the components of logistics management, change the industry, and improve the technologies.