What Is Logistics & Why Is It So Important For Businesses (Volume 2)
Logistics within the supply chain
Supply Chain… How does it differ from Logistics you may ask?
The concepts of Logistics and Supply Chain are commonly mistaken for one another. Although some people may say there is no difference between the two terms, and that “supply chain management is the new logistics”, they have totally different meanings.
But don’t feel bad if you’ve ever confused them in the past! We’re here to help you understand these terms a little better.
Logistics refers to a specific flow: purchase, distribution, & maintenance of the goods, services and information that’s being sold.
The supply chain, on the other hand, besides working with this flow of activities that logistics handles, also includes marketing, new product development, finances and customer service.
In other words, Logistics focuses on a more practical approach of the product or service that’s been put in the market, while the Supply Chain focuses on satisfying customers and suppliers (keeping consumers happy and costs under control).
To achieve this “satisfaction”, for example, the supply chain works on inventory management systems, which eliminate data entry errors and shipping errors (generally associated with manual inventory control practices, that are a part of what Logistics would do in this case). With a good supply chain management, organizations would avoid shipping delays, supply chain disruptions, and lost revenue.
Even in the cases of reverse logistics, which we will see below.
Reverse Logistics
When a product is defective, customers return it to the manufacturer. After receiving it, the company will have to test, disassemble, repair, recycle, or discart the product. This is reverse logistics: operations dealing with the process of re-using products and materials.
In this kind of process, product travels in reverse through the supply chain network. Although many companies consider the return system a concern, companies that implement an effective reverse logistics workflow can reap several benefits:
• Reduced costs: By planning returns in advance and making the correct return, you can reduce related costs;
• Faster service: By quickly refunding or replacing merchandise, the customer feels the brand cares; this can help restore their faith in a brand;
• Customer loyalty: error handling is as important as making sales. Successful reverse logistics means being able to keep its customers satisfied, even after making a mistake.
• Loss reduction: recover the loss of investment by studying the defective product and what should be done: repairing, replacing the unit, discarding it for parts or adapting it to a secondary market.
Advantages of investing in Logistics
Most of us concentrate on one thing when it comes to developing and selling our products: customer satisfaction! But to achieve this, the products MUST reach our target effectively. This is the main role of logistics.
Timing is everything when it comes to shipping products. Late arrival of merchandise leads to a decrease in customer satisfaction, which can negatively affect the company’s reliability and long-term growth. The more efficiently raw materials can be purchased, transported, and stored until used, the more lucrative the business will be.
Coordinating your resources can either boost or break your business. These tools will make it way easier to supervise and control your products:
Logistics Tools Freight control sheet: Control all the freight you carry out and organize the information of your entire fleet, from travel expenses and fixed expenses to the income obtained from freight.
Inventory control form: Register your suppliers and employees, all the entries and exits of your stock from the distribution center and have total control of your inventory.
Fleet control form: Organize your entire fleet by type of vehicle (trucks, cars, motorcycles, etc.), driver, monitor maintenance (preventive and corrective), taxiing and supply, with automatic graphics.
Complete Purchase Management Worksheet: Control your purchasing process by ensuring that all necessary payments are being made and purchase order forms are being used to find the best prices.
Consigned Stock Control Form: Supervise the entire flow of delivery, sale and purchase of products on consignment. You will be able to visualize your consigned stock, products with resellers, entries and exits, cash flow and much more.
Merchandise Delivery Control Form: record all logistics deliveries that your company makes monthly and organize the information of all your suppliers, dates and places of delivery. This way you will be able to track all the orders placed and you will have full control of your logistics.
Tips for smart logistics management
Logistics management involves a lot of planning: the more steps, the better. By considering each stage of the product, its distribution, and the return of materials and supplies, it is more likely to increase efficiency and revenue.
The larger the operation, the more complex its logistics management will be; this will require a solid logistics management plan.
To be prepared and have the best possible plan, here are some tips you can follow:
Have a solid and detailed plan: Succeeding or failing depends on the strength of your plan. Detailed planning can help mitigate potential risks and problems, if you encounter them.
Always have a plan B: No matter how good your initial plan is, it is always a good idea to have a contingency plan for each element of your logistics plan to respond to unforeseen problems that may arise.
Hiring a manager: It is super important to have an experience leader able to work on a variety of different sectors of logistics of materials and supplies. Interpersonal skills are a must; strong industry contacts are also an amazing plus to deal with last minute logistics changes in suppliers, etc.
Automation: Needless to say, automation is an integrated way to make your workflow more efficient. There are many processes that can be assisted through task automation, from tracking to delivery monitoring to fleet and inventory management software.
Learn from your mistakes! This applies to almost everything. It is super normal to mistakes on your logistical management journey. But you will always learn something from those situations. Take some time to remember what you've done, where it worked and where it didn't, and get feedback from your team.
In the business world we can only see from the outside how large companies work so efficiently. It seems like magic.
We often think that it is because of their seniority and experience in the market, that they offer a highly demanded product or service.
For your company to thrive that way as well, planning and managing all your resources is a must.
Today we have so many advantages such as access to very valuable information. Let's use this to our advantage! Use all of your great ideas and to bring them to life!
Remember this: “When you start to mix your passion with your lifestyle, then you will be able to taste what success is”.