Supply Chain Management

How Does Logistics Add Value To The Supply Chain?

How Does Logistics Add Value To The Supply Chain

Logistics plays a vital role in every business. In today’s fast-paced business environment many companies are struggling to meet the demands their consumers have and often this difficulty stems from a gap in logistics management.

As consumer demands continue to evolve and grow, companies need to have a strategic plan of action in order to fulfill the needs of an expanding market. It can be difficult to meet the needs of consumers if there is no strategy behind every business decision. When it comes to your supply chain, logistics can take care of any uncertainty or ineffectiveness your company may have, enabling faster, more efficient product delivery.

What is Logistics

Simply put, logistics is the organization and implementation of an operation. In this case, how your product or service moves from point A (you)  to point B (your consumer). Logistics manages the flow of products and entails maintaining inventory and returns, organizing warehousing, and organizing the flow of transportation traffic

Logistics keeps your supply chain organized and maintains the steady flow of your products and services to ensure customer satisfaction. A business can take as many orders as it wants but if it can’t deliver, consumers will spend their money elsewhere. Logistics aids in that process as it manages and maintains all the resources necessary for your company to be successful.

Also read: Digitize Your Entire Logistics & Freight Forwarding Operations

Logistics Improves Efficiency

With eCommerce growing exponentially, the majority of consumers order products online and expect delivery within 24 to 48 hours. The fast rate of consumption needs to be met with an equally fast rate of delivery.

To keep up with consumer demands, it is often beneficial to team up with multiple different suppliers and internal and external employees. With that collaboration comes the potential for confusion, miscommunication, and unhappy customers. Logistics can help with that as it streamlines the supply chain process through organization and operational facilitation connected through automated systems.

Logistics acts as a blueprint for your business and takes over the key role of managing the movement of your products. By implementing a logistics strategy, your company can benefit from partnerships across all areas of the supply chain from suppliers, to warehousers, to transportation managers.

Concise communication at each stage, facilitated by a logistics strategy, reduces unnecessary costs and speeds up the shipping process. To maintain efficiency in your supply chain, the logistics strategy will continually change based on the needs of the market and your company’s bandwidth. Minor or major changes along the way create a streamlined supply chain that meets your needs.

Logistics Reduces Costs

Besides improving efficiency, running a supply chain fueled by logistics saves your company money in the long run. A logistics strategy creates a workflow blueprint that provides a deeper understanding of company needs. It can weed out unnecessary spending items to reduce the overall cost of production by constantly adjusting to meet the demands of the consumer.

Additionally, streamlining communications between multiple departments reduces miscommunication that could lead to ordering and delivery errors. As a whole, it saves your company time and money by making sure orders are accurate, delivered on time, and that customers are satisfied.

Improve Availability and Accessibility of Products

Logistics create an efficient and profitable supply chain that allows for products to be delivered faster making them more readily available to consumers. Companies have to expedite the order fulfillment process to keep up with growing consumer demands. Adding logistics to your supply chain makes this process easy by having a plan in place to handle those demands.

Diversifying your supply chain by working with multiple suppliers helps your company deliver to its consumers on time. With widely available and accessible products, your company can rise above the competition and retain customers who know they can trust your business.

Also read: Inbound and Outbound Logistics: What is the Difference?

Transportation and Warehousing

Logistics plays an important role in the warehousing and transporting of a product to the consumer. As e-commerce skyrockets, consumers are adjusting to a fast turnaround when it comes to placing orders and receiving deliveries. Customers want products and they want them now. So, how are companies keeping up with this high demand? Through logistics.

Logistics management systems maintain the warehousing process to ensure inventory is accurate and products are where they need to be when they need to be there. Expedited order fulfillment is essential in today’s fast-paced market and having a strong logistics system in place can help your company stay on top of orders.

Transportation is also managed through logistics systems that take into consideration things like physical locations of warehouses and software systems that enable order processing quickly and efficiently. This can minimize the amount of labor needed and the time it takes to ship products.

Third-Party Logistics

Logistics encompasses a wide, very important, aspect of any business. Utilizing third party logistics solutions takes the pressure off of your company so you can focus on your product as the experts handle your supply chain. 3PL offers services from on-demand warehousing to inventory management that increase the value of your supply chain.

Written by
Tim Sondag

Tim Sondag Assistant Vice President, Group O Supply Chain Solutions. Nearly 2 decades of Supply Chain Management experience including inventory management, warehousing, and logistics.

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