What is Logistics Management?
Logistics Management is a component of Supply Chain Management that is concerned with planning, implementation and control of the flow of goods, services and information from its origin to the end user to fulfill the needs of consumer. Logistics management begins with acquiring of raw materials, manufacturing the end product and delivering that product to the consumer. If the logistics management is not done properly, it creates a lot of issues to the organization as well as consumers. Defects in product, not addressing the consumer requirements properly, delay in delivery of goods, issues in reverse logistics, etc. are some of the issues that may be resolved with efficient and effective logistics management.
Components of Logistics Management
There are five main components of logistics management, which are discussed as below:
- Planning, storage, warehousing and material handling
- Inventory control and management
Planning, Storage, Warehousing and Material Handling
Planning is the most important and crucial part of the logistics management. Proper planning ensures a constant and smooth flow of goods from the manufacturer to the end user. Similarly, it also ensures reverse flow of goods, i.e. from consumer to the supplier or manufacturer, in case the consumer wants to return the goods due to some reason.
Due to fluctuation of demand and supply, the smooth flow of goods is sometimes interrupted. To ensure the continuous supply of goods, storage and warehousing comes into picture. Material handling is also an important part of logistics management. Safe material handling is crucial to load, unload and carry the goods from one place to another.
Care of raw material and finished goods during transportation is very important to carry them safely. Good packaging plays a very crucial role in it. The packaging of materials depends on the type, shape and design of material being handled. Delicate and fragile material needs different packaging then the regular material. Therefore, proper research should be done before designing the packaging of the material. Besides this, the color and code of the packaging is also important to identify the material. The ultimate aim of packaging is to keep the material safe and also to make them fit into the cubes of vehicles and warehouses during transportation and storage.
Inventory Control and Management
Inventory control is related to management of flow of goods to and from the warehouses. How much quantity of goods is available in warehouses, how much quantity is coming in and how much quantity is going out of the warehouses, how to arrange the inventory in the warehouses so that it is kept safe and made available when needed, etc., are the issues covered under inventory control and management.
It also covers the demand forecasting using sales data, mathematical and statistical tools. The demand forecast is conveyed to the higher management so that proper decision may be taken for fulfilment of demand.
Transportation is one of the most crucial part of the inventory management. Transportation claims a substantial part of the logistics budget therefor the companies always search for cost effective and efficient way of transporting the goods. Selection of the mode of transport depends on cost, type of goods and urgency of making goods available to the end user. Rail and water modes of transport are the cheapest but when there is a requirement of fast delivery, air transport has to be chosen. In case of perishable items or when the customer wants immediate availability of goods, air mode of transport is most suitable. The disadvantage of air transportation is that it is costly and not suitable for transporting goods in bulk quantities. Therefore, selection of suitable mode of transportation is crucial for effective logistics management.
In today’s competitive scenario, every company wants to make the customer happy. This is only possible when the customer has a nice experience right from the ordering up to delivery and even return of the goods. Flow of information plays a crucial role in it. There are various methods, which use data to forecast demand. Now a day, the companies are relying on data analytics, algorithms and other techniques to provide faster services to the customers.
Logistics management is crucial for the success of any organization. An effective logistics management not only adds value to the company, it also helps making a customer satisfied. Organizations should employ modern methods and technologies to manage their logistics to become more profitable.