What Is Logistics Management and Why Is It Important?

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As freight volume grows and transportation becomes more complex, the need for robust logistics management is increasing. With current industry challenges such as labor shortages and rising inflation, well-planned logistics management becomes a primary factor in the success of any company's operations and directly impacts its bottom line. Additionally, it is necessary to meet customers' demands and provide superior service for an efficient logistics management strategy.  

What is Logistics Management?  

Logistics management is known as the control and supervision of the movement of goods. However, the scope of managed processes reaches far more than that. It involves several factors, including transportation management, freight and inventory management, materials handling, and order fulfillment. Proper logistics management encompasses optimization processes to maximize revenues, cut manual labor, make informed decisions, and exceed customer expectations.  

What are the main goals of Logistics Management?

Before turning to external help and investing in management technology, you want to ensure beneficial results. That is why it is essential to know how to measure the effectiveness of any new practices.

  1. Increase revenue  
  1. Improve operating cost structure  
  1. Reduce overall transportation costs  
  1. Improve customer service  

The 7 Rs of Proper Logistics Management  

The 7 Rs of logistics are used as a rule of thumb to ensure efficient and effective movement and delivery of products. The 7 Rs include:  

  1. Right product  
  1. Right quantity  
  1. Right condition  
  1. Right place  
  1. Right time  
  1. Right customer  
  1. Right price  

Confirming the 7 Rs before shipping products will save your business time and money by decreasing the likelihood of returns and help satisfy and retain customers.

How Can Logistics Planning Benefit Your Company?  

Now that you broadly understand logistics management, let's dive into how investing in logistics management will benefit your company.  

Improved reverse logistics  

An increasingly important field of logistics is reverse logistics. Reverse logistics is the return process that moves a product back to the seller from the buyer. While many logistics managers overlook this field, it is imperative to customers. Customers return between 8-9% of all products purchased in stores and 20-30% of all online products. If you are not investing in your reverse logistics management strategy, you accrue costs and lose customers.

Increased customer satisfaction  

Consumers in our increasingly digital world expect better service than ever before. In today's hyper-competitive market, if shippers are not providing fast, accurate, and quality service, they will not succeed. An excellent management strategy aims to optimize transportation processes and eliminate disruptions. Therefore, it has a direct impact on your customers' satisfaction. Improved customer service can build a solid reputation for a company's brand and help generate more business. It is crucial to have a good reputation because 93% of shoppers say they read online reviews before a purchase.

In addition, a well-arranged and high-performing freight transportation process can significantly contribute to customer experience and exceed shippers' expectations. When customers remember your business months or years down the road, they will not recall your product's exact price or subtle details. Instead, customers remember how they felt. As a logistics manager, ask yourself these critical questions:

  • Was the customer frustrated or delighted with the shopping process?  
  • Was the delivery completed on time?  
  • How did the customer feel when they opened their package?

With these questions in mind, you will likely find your supply chain pain points to eliminate or your successful points to optimize and expand to improve your customer experience.

Improves efficiency  

Whether you choose to outsource or keep your logistics strategy in-house, creating a plan improves your company's efficiency. With on-site logistics planning, your company can store materials properly while also locating them quickly. Therefore, you will be able to speed up transactions and improve business activity while remaining in complete control. On the other hand, if you feel overwhelmed by your company's logistics concerns, it is best to leave the work up to the professionals. Outsourcing your logistics with a third-party logistics company (3PL) can save you time and money while increasing capacity and visibility.

Visibility  

It is essential to create visibility in a company's supply chain. An advanced transportation management system (TMS) analyzes historical data and tracks the real-time movement of goods in and out of warehouses. Logistics managers can use this information to inform optimizations and avoid potential disruptions. TMS data analysis keeps a company's supply chain moving more efficiently while gaining operational insight.

Cost Savings    

An efficient logistics strategy will give a company control over inbound freight, keep inventory at optimal levels, organize the reverse flow of goods, and ensure freight moves on the proper transportation modes – all of which can cut costs significantly.  

The supply chain process can be divided into two main categories: inbound and outbound logistics. Inbound logistics is the movement of freight between the supplier and company, whereas outbound involves the company and the customer. Inbound freight can account for about 40% of general supply chain costs, which means good logistic management lets shippers tap into hidden opportunities for savings.  

Logistics Management System and Software  

As mentioned before, many companies turn to 3PLs to assist in their supply chain and logistics process. In addition to cost savings, 3PLs have the expertise and advanced technology to improve logistics processes much more efficiently than companies can in-house.  

PLS Logistics Services is a leading 3PL with years of experience and connections in the supply chain industry. If you are interested in learning more about our logistics management services, contact us today for a free logistics analysis!

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