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Logistics management is the process of managing all the workflows to move product along its journey from the time a business receives materials through delivery to the end user. The components of these processes include raw materials, products, equipment, packaging, shipping, and transportation. These activities typically span many different departments within the business and sometimes include third parties, especially for shipping. It’s important to track information about each product along this journey and that requires robust software with advanced ERP functionalities.
Information about the product as it transforms into a finished product is important to track as work in progress adds additional costs along the way. Tracking work in progress allows the logistics manager to account for all manufacturing costs as they are introduced so to report accurate inventory quantities and costs for the entire business, no matter what stage of production they are in.
The planning, sourcing, production, fulfillment, and shipping must all be coordinated for efficiency and cost-effectiveness for the company to be profitable. Careful analysis of processes in place, knowledge of industry standards, and experience handling common and uncommon logistical problems equip a logistics consultant to tackle a poor system and turn the business around.
Determining how much to order and how often to place those orders begins with the relationship with the supplier and average lead time. Today, more and more businesses are shortening their supply chains following a massive disruption caused by a health pandemic. The longer the distance, the greater the chance of disruptions when you consider weather anomalies, political upsets, international laws, and disasters across thousands of miles have a greater chance of holding up shipments than one would expect from a truck crossing state lines.
Logistics is part of the supply chain management picture, focusing specifically on the transportation of goods from vendors. When perishable goods are concerned, the lead time must consider expiration dates and deliver product with ample time for production to be completed and finished product delivered to the end user before expiration.
All the stages between delivery of materials and fulfillment fall under production logistics. The movement from one workflow station to another to speed up production time, reduce waste and maintain quality are focuses for the logistics manager who aims to streamline processes and improve the company’s bottom line.
Careful tracking of all information, at every stage, is important for generating accurate inventory counts and costs for everyone in the business who accesses that information. Production and logistics management are key areas of focus for business profitability.
The logistics manager may be responsible for overseeing storage onsite until an order is fulfilled; delivery to one or more warehouses; delivery to a 3PL provider; or distribution to wholesalers, distributors, or retailers, based on the business model. That business model will also dictate how product is shipped and in what quantities.
Logistics management entails detailed analysis of product performance, listening to workers on the floor for suggestions or complaints about equipment or bottle necks, and adapting the plan to continually make improvements along the way.