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Logistics for Business Defined: Importance Role & Benefits

This type of differentiation recognizes that customers hold varying levels of expectations. Fast-moving items often are standardized models or parts that customers expect will be in stock and supplied rapidly. Slow-moving items often are odd-sized or nonstandard items for which many customers will expect to wait longer periods of time. Some of the savings in inventory provided by a differentiated approach to the location and availability of slow-moving items can be devoted to providing a higher level of in-stock coverage for fast-moving items. As a result, such efforts might produce a profile of coverage and location such as the one shown in Table B. Similarly, steel service centers have become important distribution links for fabricated steel by bending, cutting, shaping, and even welding basic steel products to order.

A professional working in the field of logistics management is called a logistician. It maintains balance in replenishment avoiding stock-outs and excess stock. The system tracks low stock levels and sets automatic re-ordering for each product.

Logistics

Logistical considerations have always played a strategic role in business. Among 集運 and wholesalers, they transcend inventory management and transportation to include one of the most critical factors in business success—location in relation to markets or sources of supply. Among manufacturers, logistics concerns itself with matters as basic as plant location, sourcing of raw materials, and standards of customer service. In recent years, changes in the business environment have forced companies both large and small to pay particularly close attention to how this function relates to others. Government regulation, the health of the nation’s transportation system, energy restrictions, and technological developments all represent important considerations in the formulation of a business strategy.

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The growth in telecommunication and transportation technologies has led to further growth of the supply chain. The supply chain, also known as the logistics network, consists of suppliers, manufacturing centers, warehouses, distribution centers and retail outlets, as well as raw materials, work-in-process inventory and finished products that flow between the facilities. That being said, from a modeling perspective, there are similarities between operations management and logistics, and companies sometimes use hybrid professionals, with for example a “Director of Operations” or a “Logistics Officer” working on similar problems. Furthermore, the term “supply chain management” originally referred to, among other issues, having an integrated vision of both production and logistics from point of origin to point of production. All these terms may suffer from semantic change as a side effect of advertising.

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The timely, reliable and accurate delivery of products free from damage are thus the major elements of customer service. Competing in the global arena requires efficient supply chains where the cumulative efficiency of all the partners matter. The timely movement of freight helps to cut costs by cutting down inventories and reducing cycle-times in supply-chains, requiring a high degree of logistics skills to manage. It involves a specialized approach to order processing, billing, documentation for statutory clearances, warehousing, payment collection at the delivery points and replenishment mechanisms. In the past this was mainly delivery from delivery centers and logistics warehouses to distribution points such as wholesalers and retailers. But now direct delivery also makes up a large amount of this volume due to online shopping and e-commerce.

During periods of energy shortages, transport costs may figure more heavily in plant and warehouse location decisions. And the locations of retail facilities from resorts to department stores may be influenced more strongly by their proximity to major markets. Customs management, or global trade management, is often considered part of logistics since the paperwork to show compliance with government regulations must often be processed where goods cross national boarders or enter shipping ports. Distribution management oversees the supply chain and movement of goods from suppliers to end customer.

Your warehouse management strategy should focus on making wise use of space so that goods are handled efficiently while keeping square footage and maintenance costs as low as possible. Tracking to ensure receipt and that shipped items were delivered to the right address are essential parts of logistics management.A package that is never received and must be replaced costs a company twice—and damages the customer relationship. Logistics management enables companies to reduce overhead in areas from cutting shipping costs to shrinking how much warehouse space they need by proactively controlling inventory levels. Given that the movement of goods is what drives cash flow, it stands to reason that managing that movement—logistics management—is a core business concern. Indeed, logistics management impacts a company’s bottom line for better or worse. If the arguments for the systematic consideration of logistics in formulating corporate strategy in a healthy company primarily serving domestic markets are not sufficiently appealing, there are compelling reasons for considering them more seriously in the future.

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