What is supply chain management?
Supply chain management involves working across all the functions of a supply chain to ensure the products are valuable and beneficial to consumers. It manages the overall flow of raw materials and ensures consumers receive a high-quality finished product on time. Supply chain managers make sure all aspects of the product from creation to transportation operate smoothly to deliver a final product that exceeds all the consumer’s requirements.
Related:5 Supply Chain Manager Interview Questions and Answers
What is logistics?
Logistics is the process of moving, storing and distributing goods from when they’re first produced to their final delivery. This is a key part of the entire supply chain management process. It focuses closely on developing strategies to streamline, coordinate and manage the supply chain management process to ensure products are transported and delivered in a smooth, cost-effective and efficient way.
Overview of logistics and supply chain management
There are key concepts involved in creating and implementing a successful logistics and supply chain management process. These include:
Planning product inventory
To maintain a steady profit, use logistics and supply chain management to build a process for tracking and ordering inventory amounts that match the demand of customers. Some businesses try to forecast inventory needs according to the cost and revenue received for products. Using a logistics strategy, you’re able to use data to help plan for certain unexpected incidents that could negatively impact your inventory needs, like recent trends, seasonality, economic cycles and promotional offers.
Transporting and shipping products
When you use logistics and supply chain management, you’re able to track current shipment and production schedules to help make accurate predictions on delivery times for your customers. When calculating the logistics of transporting and shipping products, most supply chain managers use logistics to determine how much storage the trucks have, the distance between the starting and ending destination points, the trucks’ stowing ability and the volume of the products.
Knowing these factors helps the supply chain manager more accurately predict storage costs based on how long a product must stay in the warehouse before it’s transferred in a truck. They’re also able to provide accurate delivery times to customers waiting for their products.
Storing products
The warehouse logistics team typically handles responsibilities like offloading products from suppliers, shipping to customers or other destinations and packaging products, if needed. There are several different distribution strategies that can be practiced to implement an efficient product delivery process, including:
- Milk runs:Companies hire a delivery person to pick up items from one supplier and deliver to several retailers.
- Pooled distribution: The delivery driver drops off products in every destination point within their designated geographical area.
- Direct shipping: The supplier directly ships their items to specific retailers without the help of any third party delivery drivers.
Advantages of using logistics
Common advantages of using logistics in the supply chain management process include:
- Meets and exceeds consumer demand:With strategic planning that’s involved in logistics, employees can develop and implement automated processes that ensure the organization has enough products for consumers and meets consumers’ expectations.
- Delivers products faster:A strong logistics system allows employees to produce items quickly by streamlining the production and communication processes. This helps products get delivered on time.
- Reduces costs:Since pricing and inventory are more accurately predicted, storage costs are cut due to supply forecasts and reliable shipping times.
