Napoleon Bonaparte may not come to mind as a logistician, yet he made the axiom that an army marches on its stomach very influential regarding success in war.In 2019, the term logistics refers to the reliable transportation of goods and products. According to a Statista study, U.S. businesses invested $1.63 trillion on logistics that year, transporting items from source to destination through the whole supply chain network. By 2025, over 5.95 trillion ton-miles of freight will move through the United States.
Logistics is the process of managing the movement of goods and materials from the production stage to the consumption stage. In order to increase efficiency and reduce costs, there are a variety of logistical solutions available. Some common solutions include warehouse management, distribution, transportation, and supply chain management. Each solution has its own advantages and disadvantages, so it's important to choose the one that best suits your business' needs.
What Is Logistics?
The task of logistics is an aspect of the overall supply chain.The logistics of moving merchandise from place A to place B include transportation and warehousing. The complete supply chain is a system of firms and companies adhering to a sequence of actions, including logistics, to produce and distribute items.
What Is Logistics Management?
Logistics is the management of procedures to move goods internally or from buyer to exchanger. Logistics managers handle and control all the many details of the logistics process; in fact, there are a number of certifications for their responsibilities.Routes are selected based on aspects such as speed, proximity to shipping routes, and even security risks. Insurance and packing considerations need to be weighed against costs such as weight and recyclability.
Independent costs are another important factor to consider, such as providing service and support to the end user. If a shipment of dairy products arrives spoiled due to low refrigerator capacity, the blame rests with logistics personnel.
Logistics software helps companies make optimal routing and shipping decisions, save costs, safeguard investments, and track the movement of goods.Software implementing such algorithms can also automate logistics procedures, including choosing transportation providers due to rate fluctuations or contractual agreements, printing shipping labels, automatically adding transactions to ledgers and on the balance sheet, ordering carrier pickups, recording receipts and retaining signatures.
The Role of Logistics
There are seven pillars of effective logistics:
Material sourcing includes more than simply searching for the least expensive supplier for raw material needed to mass-produce an item. Logistics involves determining and managing the source of product costs, including overruns, delivery cutoffs, competitor ranks, and shortages.Managing all factors involved in finding the right supply for a specific material requires good strategic sourcing and planning. This procedure is called strategic sourcing, and the logistics involved play a significant role in those efforts.
At the core of logistics is the act of transporting goods from Point A to Point B. First, a company must decide which mode of transportation is most appropriate, such as air or land, and understand the cost, travel time and distance between two points.In the case of international shipments, a transporter must be well-versed in customs, tariffs, compliance, and any other relevant laws and regulations. Transport managers need to document and track shipments, manage billing, and report on performance utilizing dashboards and analytical tools.
To fulfill an order, items must be picked from the warehouse for each delivery order, be properly packaged, labeled, and shipped out to the buyer. In concert, these processes constitute order fulfillment and are the foundation of the logistics sequence in distribution procedures.
Warehouse management systems also facilitate logistical planning. For instance, logistics planners must consider warehouse space availability and special requirements such as cold storage, docking facilities and proximity to modes of transportation such as rail lines or shipyards.