What is logistics? A guide on all you need to know about logistics management.

Whatever your business location, effective logistics can curb the cost and time you’ll spend to move goods and services from your warehouse to your customers.

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Logistics is the life of every business transaction. It allows your goods and services to move thereby providing place and time utility. If your goods and services cannot move to meet the right consumer on time, there will be no transactions and no profits.


Logistics is a process, it moves goods, people, and related information from one location to another. Logistics is a process that will coordinate and ensure the movement of resources like liquids, food, materials, services, and people from one location to the desired location. Logistics manages the flow of things between the point of origin and final consumer. 


Originally a military-based term, it was used to describe how the military received, stored and moved supplies. Whether business or humanitarian logistics, its main goal is to minimize cost of operations and maximize customer/ beneficiary’s satisfaction.


Some pillars of effective logistics

Material sourcing: sourcing materials for your manufacturing is way beyond finding a lowest-cost supplier. Logistics manages contributing factors like backorders, increased shipment cost due to long distances, lockouts and warehousing cost. Taking into consideration these contributing factors will only make your sourcing or procurement strategic. 


Transportation

Physical distribution of goods is the core of logistics and probably the most costly function. You must optimize your mode of transportation to ensure it is cost effective and suits the type of products you’re dealing with.


Warehousing

A warehouse is not simply a place to store your goods temporally while waiting for orders. Warehouse organization is part of logistics planning. For instance, as a logistician, you must consider your warehouse space and maximize it, docking facilities, proxy to modes of transportation, other facilities like cold storage depending on the type of products you’re   dealing with. 


Also consider classifying your goods using the ABC analysis for instance fast moving products should be placed at the front of the warehouse while goods with lower demand are stored towards the rear. 


Order fulfilment

This is the heart of the logistics sequence in customer distribution. For a transaction to be complete, you must pick the good from your store as per the customer’s order, package them properly and then ship to the right customer. The backbone of this is information flow.


Demand forecasting

Logistics relies ponderously on inventory demand forecasting. If you are able to forecast, your business will never run short of high-demand products or even hold inventory infinitely.  


Why is logistics so important to your business?  

Whatever the size of your business, you’ll obviously want to expand maybe from regional to global level. 


Logistics helps create value for your business:  value is not only limited to quality and quantity. Logistics will make your products more available in the market and as a wise business leader, you should consider it a very important tool in creating value for your customers.


It reduces cost and improves efficiency: with increasing globalization, logistics has become the heart of most businesses and supply chains. Business managers have realised they can now outsource their logistic activities to focus on their core competence. Delivers products at the right place timely: a professionally organized logistics helps businesses to deliver on time and reduce their lead time. Keeps your customers satisfied. Remember your customers are your financiers, your business most precious asset. Logistics helps you identify your potential customers and ensures their needs are maximized.   


In logistics, we have what is known as the seven rights of logistics otherwise known as the 7Rs of logistics. These 7Rs means “getting the right product delivered to the right customer at the right time, at the right location, in the right condition, in the right quantity, and at the right cost”. In essence, it is the goal of logistics management. Let’s take a brief overview of what these 7Rs of logistics are:


Right product. 

This means delivering the exact product ordered by your client according to colour, size and brand. Supplying the right product to your customer is a thumb up for a successful business and happy customers.


Right time

To the customers, timing is everything. Whether a customer ordering a birthday cake, fashion wear, or a manufacturer that needs raw materials to meet their schedules, late deliveries may be rejected. Business operators must prioritize time delivery.


Right condition

Whether used or brand new products, customers want their goods in the right condition, functioning properly.


Right place

This means tracking the goods to ensure they are delivered at the right place. A product that is never received must be compensated by the company which is costly and also damages the company’s reputation.


Right customer

Raving order mix ups communicates a lack of respect for the customer. Logistics management uses systems like the ERP minimizes errors in picking and delivering orders. 


Right cost

It is imperative to have a competitive pricing margin in the industry to turn your inventory regularly. 


Right quantity

Getting the right quantity entails clarity in picking and packing of ordered goods. 


Logistics management

In business, Logistics management is a part of supply chain management that plans, implements and controls the efficient, effective forward and reverse flow of and storage of goods, services, information from point of origin to point of consumption. This process occurs in order to meet customers’ requirements. The main aim of logistics management is to get things moving in a synchronized way in order to meet a specific criteria, for instance, the right product, timeliness, condition and right place. 


Benefits of effective logistics management

Visibility

Setting in place your logistics activities and managing them properly affords greater visibility. With logistics management, you can see through your supply chain and business processes. This will enable you to better control cost, spot supply chain discrepancies, and conduct demand planning. 


Reduced overhead

Logistics management will enable you to shrink shipping cost, maximize warehouse space and proactively control inventory levels. 


Competitive edge

Delivering goods correctly and on time will create the basis for a good customer experience. 


All these measures culminate to a logistically smooth running business which is essential for profit making, timely delivery and happy customers.

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