WHY SUPPLY CHAIN AND LOGISTICS IS SO CRITICAL TO YOUR BUSINESS
Logistics management is a part of supply chain management; it plans, implements and controls the flow and storage of goods and services in order to meet customer’s requirements. Logistics management is a basic factor in the success of any company’s operations and has a direct impact on its bottom line. As freight volume grows and transportation becomes more complicated, the need for logistics management rises.
What is Logistics Management?
The word ‘logistics’ originated in the military. Logistics was the term used for the process of getting equipment and supplies to troops. It wasn’t until the 1950s, when the complexity of shipping materials to and from businesses increased, that ‘logistics’ referred to business functions. Now, Logistics is an industry and a vital part of any business model; it is the control of the flow and storage of goods into and out of a business.
Why is Logistics Management Important?
Meeting customer demand and providing superior service is one of the most important benefits of good logistics management. Consumers demand better service and this mandate has ripple effects up the supply chain, creating a need for shippers to provide fast, accurate and quality service. Logistics management is responsible for satisfying customer demands.
Logistics management is also important for creating visibility into a company’s supply chain. Advanced transportation management systems (TMS) analyze historical data and track real-time movement of goods into and out of a business. Logistics managers can use this information for process optimization and avoid potential disruptions. TMS data analysis keeps a company’s supply chain moving more efficiently, all while gaining operational insight.
Proper logistics management drives increased revenue. Improved customer service can bring a good reputation to a company’s brand and generate more business, and supply chain visibility creates an opportunity for major cost savings in operations. Logistics management will give a company control over inbound freight, keep inventory at optimal levels, organize the reverse flow of goods, and utilize freight moves on the proper transportation modes – all of which can cut costs significantly.
With the growing complexity of logistics management, many companies select a 3PL to manage some or all of their logistics functions. 3PLs have expertise and advanced technology to cut costs and improve processes much more efficiently than companies in-house unites. The emergence of 3PLs within the value chain has created platforms for sound management appraisals and cost analysis within the complex structures of organizations.