What Is Logistics Management Types,Tips,Components & Benefits

Introduction

The rapidly growing demand for online commerce has given rise to business models with shorter order fulfillment cycles, increased competition, reduced margins, and a paramount need for excellent customer service. These core drivers have necessitated vast improvements in logistics management. Analyzing a company's logistics function and using the correct tools and tips to optimize it has become crucial for success.

What is Logistics Management?

Logistics management is defined as a set of multiple processes that facilitate the efficient movement of raw materials, goods, parcels, finished products, and freight from their point of origin through to their end consumer. Depending on the degree of digital adoption within an ecosystem and the stakeholders and companies within it, these processes can be manual or automated. Today's logistics management methods have rapidly adopted new-age technologies like cloud technology, the Internet of Things (IoT), artificial and predictive intelligence, machine learning, etc.

Core Activities of Logistics Management

Logistics management includes several core activities such as order fulfillment, warehousing, inventory management, packing, predicting patterns of demand and supply, and fleet and driver management to name a few. By deploying such powerful tools to manage the logistics function, today's businesses have become empowered. They have identified new revenue streams, improved profitability, and achieved high levels of customer satisfaction.

Types of Logistics Management

1. Supply Management

Focused on the planning, procurement, and coordination of raw materials required at specific locations and destinations to facilitate the production of goods and products. This also includes the warehousing, storage, and movement of materials and inventory. Importantly, supply management needs to ascertain demand patterns so that the corresponding supply of materials can be organized. Poorly planned or executed supply chain management will result in disruptions and losses along the entire supply chain.

2. Materials Management

This relates to the movement of material and supplies from a central location (e.g., a centrally located warehouse) to several other points of its requirement in an organized and timely manner where further production or distribution can continue. As is natural with materials handling and distribution, this type involves tracking, stock keeping, loading, and unloading of materials.

3. Production Logistics

Refers to the planning, execution, and monitoring of various stages of production in a company, handling all the coordination required in the assembling or manufacturing process, production areas, warehouses, and factories for the production and delivery schedules. Efficient production logistics enable a company to operate with capital efficiency.

4. Customer Service Management

The strategies, practices, and technologies used by firms to analyze and manage customer interactions and the data generated across the customer life cycle process are referred to as customer service management. Transparent communication and damage-free deliveries made on time form the cornerstone of good customer service management. In addition to building strong business relationships, it results in a critical metric: customer retention.

5. Returns Management

Also known as returns management, it refers to the handling of order returns, including the reclamation of supplies and materials from the supplier (e.g., manufacturer, agent) for products returned by end customers due to damage, unwanted condition, or other legitimate reasons. Standardized inspection, sorting, replacement, restocking, and timely decision-making with regard to returned products allow companies to reduce their losses.

Benefits of Logistics Management

Automating core logistics operations such as route planning, scheduling, roster management, task allocation, etc., not only saves significant time and money but also leads to higher operational efficiency, better future planning, and maintaining a robust, profitable operation. Logistics management enables a company to maintain an integrated view of their resources, departments, and teams while monitoring operations in real-time. This transparent view helps achieve optimal efficiency, minimizing disruptions, and making the best use of resources.

Optimization of Delivery Routes

Optimizing delivery routes with the support of modern systems like last-mile software is a critical part of logistics management. Such advanced techniques balance numerous fluctuating elements like traffic, weather, empty miles, tonnage, etc., to come up with optimal routes.

Strategic Inventory Locations

With customers demanding faster and cheaper deliveries, it is crucial to minimize the distances that parcels travel from storage points to final destinations. Identifying inventory locations that minimize both delivery times and operational costs is fundamentally important.

Environmental Impact

Transportation contributes significantly to environmental damage due to carbon emissions. Adopting modern technologies like electric vehicles, green fuel, digital documentation, and route optimization can reduce the carbon footprint of logistic operations significantly.

Customer-Centric Approach

Today's customers demand control and instant updates about their parcels' locations, expected times of arrival (ETAs), and any possible delays. Companies must manage their logistics operations to offer various options to customers, making the operations customer-centric, especially in the last mile.

Digital Adoption & Risk Mitigation

Adopting digital processes and logistics tools allows companies to achieve a robust supply chain operation, mitigate risk exposure, establish best practices, and ultimately promote healthy margins while building customer loyalty.

Third-Party Logistics (3PL)

Using third-party logistics (3PL) companies allows client companies to outsource all fulfillment and distribution functions. These global behemoths ensure all-around efficiency and optimize the use of resources.

Keywords

Logistics Management
Supply Management
Materials Management
Production Logistics
Customer Service Management
Returns Management
Digital Adoption
Route Optimization
Inventory Locations
Environmental Impact
Customer-Centric
Third-Party Logistics (3PL)

FAQ

1. What is logistics management? Logistics management is a set of processes that facilitate the efficient movement of raw materials, goods, parcels, finished products, and freight from their point of origin to their end consumer.

2. What are the core activities of logistics management? Core activities include order fulfillment, warehousing, inventory management, packing, predicting patterns of demand and supply, and fleet and driver management.

3. What are the types of logistics management? Types include supply management, materials management, production logistics, customer service management, and returns management.

4. Why is supply management important? Supply management ascertains demand patterns to organize the supply of materials, preventing disruptions and losses in the supply chain.

5. How does optimizing delivery routes benefit companies? Optimizing routes with modern systems balances elements like traffic and weather, reduces empty miles, and leads to significant time and cost savings.

6. How can logistics management reduce environmental impact? By adopting electric vehicles, green fuel, digital documentation, and route optimization, logistics operations can significantly reduce their carbon footprint.

7. Why is a customer-centric approach important in logistics management? Providing real-time updates and multiple delivery options enhances customer satisfaction, crucial for customer retention and building strong business relationships.

8. What is the role of third-party logistics (3PL) companies? 3PL companies enable client companies to outsource fulfillment and distribution functions, ensuring efficiency and optimal resource use.