Great ideas remain beautiful hypotheticals if there isn’t a way to implement them. Think of the idea as the inspiration, and the organization of that idea as the work required to actualize it. But that work isn’t a one-time activity, of course: it’s a process that flows from one task to the next. There are many points along that journey, from the idea to the execution to the customer.
Managing that work process is called logistics management. It considers everything from information to materials, production and more. Without logistics management, the many phases of any product will quickly fall into a chaotic mess. If you’re not familiar with logistics management, don’t panic. Here’s a look at the basics and how to best apply it to your business.
What Is Logistics Management?
Logistics management is a detailed process of organizing and implementing an operation. When it comes to business, that process is the flow of work from the beginning to the end, in order to fulfill customer expectations as well as those of your organization.
A practical and simple way to look at logistics, as quoted from The Handbook of Technology Management, “is as having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer.”
Logistics management manages resources that can range from tangible goods (such as materials, equipment and supplies) to food or other consumable items. In doing so, logistics management deals with integrating the flow of information and its management tools, materials handling, production packaging, inventory, transportation, warehousing and sometimes security.
To model, analyze, visualize and optimize this complex logistical puzzle, the use of a dedicated simulation software is often used. The person who works in this field is called a logistician.
Relation to Supply Chain Management
Logistics management is a subset of the larger supply chain management. Supply chain management plans, implements and controls the efficient flow of storage, goods, services and related information from the point of origin to the point of consumption. This is done for the purpose of meeting the requirements of customers.
Logistics management in business works across all industries. Its aim is to manage the fruition of project life cycles, supply chains and resultant efficiencies. As businesses grow more complex and expand into a global marketplace, business logisticians have evolved into something called supply chain logisticians.
With logistics management in business the focus is twofold: inbound logistics for internal functions and outbound logistics for the external flow from the point of origin to the point of consumption. Logisticians focus on inventory management, purchasing, transportation, warehousing, consultation and the organization and mapping of these processes.
Different Types of Logistics Management
There are four main types of logistics management, each emphasizing a different aspect of the supply process.
1. Supply Management and Logistics
This involves the planning, procuring and coordinating materials which are needed at a certain time at a particular place for the production of a task. This includes transportation of the materials as well as a place to store them. Additionally, evaluating the level of supply at the different stages of the process is required to make sure the needs of the customer are met, for example delivering materials to a construction site or parts for a manufacturing plant.
2. Distribution and Material Movement
This takes stored materials and transports them to where they need to go. The issues in this involve moving materials; including loading, unloading and transportation, as well as keeping track of the stock and how it is used. This type of management controls the movement of supplies from a central warehouse to the stores that sell the product to the public.
3. Production Logistics and Management
This manages the stages of combining distributed supplies into a product, such as coordinating what is needed to make or put together something. This involves the staging of materials at the right time to work with the building of a product. This stype of logistics management falls in the realm of product management.
4. Reverse Logistics and Product Return
This is about the management of reclaiming materials and supplies from production. For example, on a construction site it involves the removal of excess material and returning those materials to one’s stock. It can also refer to the return of unwanted or unused products from the end customer seeking a refund.
The Distribution Network of Logistics Management
The various links and points of distribution in a logistics management network include the following:
- Factories that manufacture products
- Warehouses that store products
- Distribution centers to receive and return items for clients
- Transport to deliver product
- Retail locations, from small to larger stores to sell product
These are the major hubs for the logistics of a product, though there can be vendors and intermediaries operating between these points.
Tips for Smart Logistics Management
Logistics management involves a lot of planning: the more steps, the better. By considering every stage of the product, its distribution and the return of materials and supplies, you’re more likely to increase efficiencies and increase revenues.
The larger the operation, the more complex and difficult the logistics management. Therefore, the more you need a strong logistics management plan. In order to be prepared and have the best plan possible, the following are some tips to follow.
- Have a Strong Plan: Like any management, it succeeds or fails on the strength of the plan. The more thorough your plan, the less you’ll have to think on your feet. There will always be issues, and only so much potential risks you can plan ahead for, but planning early and in detail can help mitigate delays and other obstructions to the clear flow of materials and supply.
- Make a Plan B: No matter how good your initial plan is there can always be something that comes along that it cannot manage. That’s why you need a contingency plan for every element of your logistics plan to respond to unforeseen problems that might arise. But it’s important to also know when to give up the original plan and move on to the secondary one.
- Hire a Manager: It’s critical that this process has a leader who is experienced and able to work with a variety of different parties, all of who are involved in the logistics of the materials and supplies. That means interpersonal skills are a must. They should also have strong industry contacts in order to deal with any last-minute logistics changes in suppliers, etc.
- Automate: It goes without saying that automation is a built-in way to make workflow more efficient. The are so many processes that can be helped through task automation, from tracking to monitoring delivery to fleet and inventory management software.
- Learn from Mistakes: This goes for most everything. You’ll take missteps on your journey of managing logistics. That’s a given. What’s not assured is that you’ll learn from those mistakes, so they don’t happen again. Therefore, take time to look back on what you’ve done, where it worked and where it didn’t, and get feedback from your team.
Why Is Logistics Management Important?
The purpose of logistics management is obviously about finding more efficient and effective ways to move resources and products from conception to completion and, finally, to the customer. But the driving force of these actions is to meet customer demand and provide the best service possible to retain customers and maintain their satisfaction by meeting their requirements.
As customers demand better service, there’s a need to ship faster, more accurately and with a high level of quality. It is through logistics management that customer satisfaction is achieved.
But that’s not the only benefit of logistics management. It also helps to create visibility in the business’ supply chain. By analyzing the historical data and tracking the real-time movement of goods, logistics managers can better the flow of materials and avoid any potential disruptions.
Therefore, logistics management helps drive up revenue. It improves customer service, adds to the company’s good reputation and brand, which in turn creates new and more business. With more visibility into the supply chain there is the opportunity to save costs in operations, by controlling inbound funds, keeping inventory at the right level and organizing the reverse flow of goods.
Logistics management has many things to track and resources to schedule. As projects go, it’s one of the more complicated. ProjectManager.com is a project management software that gives you the tools to manage logistics more efficiently through automation and real-time monitoring. Kanban boards for visual workflows, online Gantt charts for scheduling and a real-time dashboard to report on progress as it happens. See how it can remove bottlenecks from your supply chain by taking this free 30-day trial today.