Recognize the Purpose, Functions, and Benefits of Logistics Management!

Logistics management helps companies in shipping goods. What will be facilitated when using this logistic management? Then, what are the goals, functions, and benefits? You can read and understand this through the following article TransTRACK!

What is Logistics Management

Logistics managements includes several processes that ensure the smooth movement of goods, freight, parcels, raw materials, finished supplies, and packages from their point of origin to the end customer. These processes can be automated and manual depending on the digital maturity of a company. Modern and efficient Logistics Managements, armed with technologies such as Artificial Intelligence, Machine Learning, Predictive Intelligence, Internet of Things (IoT), among others, empowers businesses to discover new revenue streams, improve shipment profitability, and generate delightful customer experiences. Logistic Management is a core component of Supply Chain Management (SCM).

SCM is a series of interconnected activities related to the transformation and transition of raw materials into finished goods until they reach the consumer. SCM handles the entire process of buying, supplying, manufacturing and selling, while logistics bridges the gap between the various segments. SCM gives companies a substantial competitive advantage through efficiency.

Logistics also involves other activities such as warehousing, protective packaging, order fulfillment, stock control, maintaining a balance between demand and supply, and stock management.

One of the most important concepts in Logistics Managements is the concept of 7 Rs or 7 “Rights”. The Chartered Institute of Logistics & Transport (UK) defines the 7 Rs as:

“Getting the right product, in the right quantity, in the right condition, in the right place, at the right time, to the right customer, at the right price.”

Objectives of Implementing Logistics Management

There are five main objectives of the Logistics Managements process:

Minimizing Manufacturing Costs

Logistics management can have a direct impact on manufacturing costs. For example, delays in picking or delivering raw materials can delay production. As a result, production costs soar.

Efficient Logistics Management improves material handling and speeds up transportation. It also increases its security, which in turn reduces the shipping costs of the business. For example, a clear transportation plan with provisions for alternative routes will improve shipping efficiency. Therefore, a well-planned logistic management process can maximize business profits.

Efficient Flow of Operations on Logistics Management

Logistic management enables smooth flow of manufacturing processes. It ensures timely delivery and optimal utilization of raw materials. To achieve this, businesses need to optimize communication with other departments.

Logistic Management enables a clear flow of information from one department to another. This is done with solid planning and constant review of plans. Smooth process flow makes the entire operation efficient. An efficient logistics strategy streamlines the complex network of internal and external processes.

Better Communication Flow in Logistic Management

Logistic management is involved with many internal business functions and external trading partners. Other departments rely on logistics to obtain raw materials or transport their finished goods on time. Also, logistics staff need to coordinate with suppliers, vendors, and customers to pick up and deliver goods.

With many parties involved, it is difficult to establish a clear communication network. Even one miscommunication can lead to the loss of a lot of time, money, and resources. Therefore, a seamless flow of communication is an important goal of Logistic Management.

Providing Competitive Advantage

The main goal of logistic management is to provide better customer service. Logistic Management aims to eliminate processing errors by establishing simplified process flows. Process errors occur due to inefficiencies or differences in procedures. A good logistics strategy will take into account all gaps in the process and device measures to address them. Thus, it minimizes process errors. For example, if items are placed haphazardly in the warehouse, finding items at the time of delivery will be a nightmare. However, if the shelves in the warehouse are categorized according to different items, retrieving items will be easy.

Also, it focuses on speeding up the delivery process. Quality processes and fast service will ensure happy customers. These measures increase sales, which automatically gives businesses a competitive advantage over competitors.

Better Inventory Management

Inventory management is an important component of logistic management. Inventory management has a direct impact on various business functions. These include financial management, production management, and customer service management.

An efficient logistics solution also makes the company’s inventory management effective. Because inventory is an integral part of the bigger picture of Logistics Management. One of the important functions of logistics is maintaining the correct stock levels.

Functions of Logistics Management

Logistic management has various functions. These functions will relate to each other. The following are the functions of Logistic Management.

1. Planning and Needs Fulfillment

The implementation of Logistic Management functions as planning related to the needs of each program in the organization. Starting from analyzing needs and determining the priority scale to product availability.

2. Budgeting

Planning and fulfillment activities must pay attention to the budget. In budgeting activities, we must ensure that the procurement of goods is in accordance with the budget we have. If the logistics cost budget does not match, then changes must be made to the planning adjustment.

3. Procurement

The implementation of Logistic Management is focused on the procurement of goods. When there is a budget mismatch and coupled with not allowing changes in planning, it must be improvised in logistic management with a limited budget, therefore this is an important thing that must be considered.

4. Storage and Distribution

In this function, the application of Logistics Management where a product of goods has been obtained in the right place. Later the goods will be distributed to other interested parties in accordance with existing policies.

5. Maintenance

In this case, the implementation of Logistic Management also includes all maintenance of goods. The goal is that the goods used and stored are not quickly damaged.

6. Removal

In the implementation of logistic management, there are also removal activities. Removal is carried out to separate damaged and unused items to be repaired or replaced with suitable ones.

7. Control

The implementation of Logistic Management also has a control function, where a logistics manager ensures that all logistics functions can be carried out in accordance with organizational goals in order to create effective and efficient processes and results.

Benefits of implementing Logistics Management

After we have discussed the objectives of Logistic Management, there are the benefits of logistics management. Good logistic management will have an impact on the many benefits obtained by the organization that implements it. Here are some of the benefits of logistics management, among others:

1. Inventory in Logistic Management

The implementation of good Logistics Management will have an impact on the fulfillment of the availability of goods so that operational activities can run smoothly.

2. Transportation Logistic Management

If we discuss logistics activities, of course, it is closely related to transportation. So that an organization that has implemented good Logistic Management will be able to guarantee transportation for the smooth distribution of goods.

3. Logistic Management Facilities

Facilities are very important in the implementation of logistics management. There are various facilities that are needed so that implementation can be carried out effectively and efficiently. If an organization implements Logistics Management, it will know what facilities are needed to support so that goals can be achieved.

4. Logistics Management Services

Service is very important and must be considered for every organization that provides services. In addition to providing good service to consumers, the service is also to other parties, such as suppliers and stakeholders.

5. Management and Administration Logistics Management

Management activities will always intersect with administrative activities. This is done so that every activity in the management of the organization is well recorded, so that all information in the implementation of logistics management can be found easily if needed later.

6. Inbound Transportation

In inbound transportation, the implementation of logistics management handles the distribution of goods and raw materials from suppliers to our organization or company. If the implementation of Logistics Management is carried out properly, good cooperation will be formed and will have an impact on the smooth implementation.

7. Outbound Transportation

In outbound transportation, the application of Logistics Management will handle good distribution to consumers and will ensure that the delivery of goods can be carried out properly and smoothly.

8. Problem Solver

Problems will always arise, no exception in terms of supplying goods there will definitely be problems that occur. This is where the implementation of Logistics Management plays a role, problems can be overcome and also anticipated quickly, precisely, and accurately.

9. Communication with Customers

Today’s consumers often track the goods they order. A good implementation of Logistics Management can convey information about the distribution of goods and can be done effectively and efficiently.

10. Customer Trust

Customer trust is very important. This will be achieved if there is the best service that we do in the implementation of Logistics Management, starting from the delivery of information, timeliness, and other services. Customer loyalty will also be formed by itself and have an impact on revenue.

Logistics Management will facilitate both parties, both companies and customers. To be able to achieve good Logistics Management, good fleet management is also needed. For those of you who have logistics companies or companies that use fleets, you can use the  Fleet Management System from TransTRACK which has a myriad of benefits. Check for  more details !

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