Complete Guide to Logistics Management - Definition, Process and More

Introduction to Logistics Management

The supply chain consists of several levels designed to produce and distribute goods, from retrieving raw materials to producing finalized products. As supplies move through operations, the need for product supervision and transportation emerges. These phases rely on detailed planning from the logistics management department to keep processes on schedule.

Without successful logistics, the workflow can be hindered by delayed shipments, incorrect storage units, and increased product returns. On the other hand, when the material movement is properly mapped throughout the supply chain, businesses can improve their warehouse efficiency.

Therefore, companies can benefit from investing their time and effort into ensuring their logistics management can appropriately coordinate all transportation needs.

What is Logistics Management?

Logistics management is a process within the supply chain that focuses on the planning of transporting and storing goods before the final sale. The plan ensures that products promptly arrive at their destination and are kept appropriately. Successful logistics management can reduce carrying costs and improve customer satisfaction.

Logistics management begins when raw materials are shipped and ends when the finished product is delivered to the customer. Due to the duration of this process, managers need to implement strategic planning to efficiently facilitate the various steps. There are several elements to successful logistics management, including-

• Choosing vendors that offer transportation facilities

• Finding the fastest transportation routes

• Searching for the best delivery method

• Utilizing software to automate standard processes
  

Types of Logistics Management

There are four essential types of logistics management that focus on different phases of the supply chain-

1. Supply Management

Supply management entails planning, ordering, and receiving raw materials or products that are needed by a specific deadline. This requires logistics managers to find the best form of transportation and storage for the specific item.

For example, perishable foods may need to be transported in refrigerated vehicles and stored in temperature-sensitive units until they are shipped to stores. Managers also need to consider the order size to ensure the mode of transportation can handle the supply volume.

2. Distribution Management

Once the goods are transported safely to storage or distribution centers, managers need to determine their final destination, such as retail or grocery stores. This process takes time, as it involves loading, transporting, and unloading items.

When the goods arrive at their final destination, employees must count and report stock usage. Distribution management is crucial as it monitors the activity of products as they move from warehouses to stores.

3. Production Management

Production management oversees the phases of merging raw materials and components into the final product. This process includes finding and retrieving the necessary materials to build the item. Managers need to correlate material arrival times with the production schedule to avoid stalling operations or storing early shipments.

4. Reverse Logistics and Product Returns

There may be excess materials that need to be reclaimed after production. This also applies to customer returns, as long as the product is unused. Therefore, logistics managers need to schedule pickups to retrieve extra supplies and products to reenter into inventory.

Goals of Logistics Management

Without benchmarks, supply chains would run inefficiently and face the risk of falling behind the competition. By setting clear objectives, logistics management can minimize the impact of risks, such as missing deadlines, by optimizing workflow to work towards goals. Logistics managers should focus on six critical goals-

• Increase Efficiency

• Decrease Response Time

• Reduce Unexpected Events

• Optimize Inventory Levels

• Reduce Logistic Expenses

• Improve Quality

8 Logistics Management Processes

Through detailed logistics management at each supply chain level, businesses can pinpoint and eliminate inefficiencies that drain profits. Logistics managers can begin by focusing on 8 management processes-

1. Facility Inspection

Depending on the industry, managing a logistics facility can be challenging. Employees may face several workplace hazards, from dangerous chemicals to large shipping trucks. Without properly managing the activity within a facility, companies can face risks of non-compliance, inefficient operations, and an unsafe work environment.

By inspecting the facility monthly, managers can confirm operations abide by all safety regulations, and the facility remains fully stocked to streamline workflow. Management should check for-

• Damages

• Cleanliness

• Obstructions

• Proper Lighting

• Appropriate Safety Measures (fire extinguishers, ventilation, fire blankets)

• Reception Supplies

• Bathroom Supplies

• Equipment Function

• Secure Loading Dock

• Proper Storage

• Damages/Leaks

• Tires

• Guards

• Fluid Levels

• Seat Belt

• Motor

• Lights

• Functions

• Forklift Condition
  

3. Inventory Management

Without an adequate inventory system in place, companies cannot control stock levels, storage, or human error. Improper inventory management can cost businesses unnecessary expenses from reconciling damages due to poor storage or high warehouse costs from overstocking.

Instead of relying on guesswork, companies should check their inventory management process to promote ordering and storing efficiency. Managers should consider several elements when placing and receiving an inventory order, including-

• Company Budget

• Current Stock Levels

• Order List

• Purchase Order Approval

• Tracking Details

• Arrival Time

• Return Damaged Goods

• Update Stock Records

• Identification Number

• Doors

• Exterior Walls

• Roof

• Inside Walls (make sure it is empty)

• Floor

5. Order Fulfillment

Once a customer orders a product, logistics managers are responsible for orchestrating shipments to ensure fast and safe delivery. While this may be simple for minimal orders, fulfillment can become challenging when order volumes increase. Instead of a sole supervisor, large companies need to implement a comprehensive system to efficiently fulfill requests.

With a detailed and standardized fulfillment system, management can ensure that each order is processed accurately and efficiently. To successfully prepare and deliver orders, management needs to-

• Record Order Details

• Receive Payment

• Check Stock

• Request Items from Inventory

• Record Stock After Fulfillment

• Check Items for Quality

• Print Packing Lists

• Package Items Securely

• Weigh/Measure Package

• Schedule Delivery

• Forward Tracking Information to the Customer

• Note Client/Order Details

• Record Salesperson

• Check Stock

• Receive Payment

• Schedule Delivery

• Contact Warehouse

• Forward Tracking Information to the Customer

• Follow Up with Customer
  

7. Vehicle Inspection

Regardless of the type of vehicle a business uses, they must perform annual inspections, even if they do not legally require routine checks. A broken-down car will not only disrupt shipment schedules but put employees at harm as well. With thorough annual inspections, businesses can save on long-term repair costs, keep operations on schedule, and get an overview of the fleet's condition.

During annual checks, employees should inspect-

• Brakes

• Bumpers

• Horn

• Seatbelts

• Air Conditioner

• Defrosters

• Windshield Wipers

• Lights

• Turn Signals

• Mirrors

• Tires

• Fluids

• Battery

• Windows

• Damages

• Cleanliness

• Obstructions

• Lighting

• Safety Measures

• Safe Storage

• Inspected Equipment

• Secure Stair Railings

• Clear Aisles
  

Tips for Successful Logistics Management

Successful logistics management requires extensive research and detailed planning. By outlining each phase, from production to distribution, companies can increase efficiency and profit margins. However, more extensive operations require intensive management practices.

The best practices for building successful logistics management plans include-

• Develop a Thorough Plan - The success of any operation relies on how well it was planned, and logistics management is no different. The more elements are addressed during the planning phase, the less the company has to rely on guesswork. Detailed outlines can mitigate risks and enhance workflow.

• Have a Backup Plan - Even the best plan has weaknesses, and businesses cannot avoid every threat. Therefore, having an alternate plan in place for unexpected events gives businesses flexibility and adaptability.

• Hire a Manager - Logistics requires an experienced manager that can handle the various supply chain facets. The manager should have excellent communication, multitasking, and people skills to work with all parties involved in the supply chain.

• Use Automation - By using modern software, such as ordering solutions, logistics managers can automate standard operations to streamline workflow. Software also enables easy shipment and inventory tracking.

• Learn from Mistakes - Companies need to understand that they will make mistakes at some point, but they must learn from them to avoid repetition. After a misstep, managers should evaluate why and how it happened to make the appropriate changes.