Understanding the role of logistics in the supply chain will help manufacturers make the most of their investments and operations.
Manufacturers that realise the significance of logistics and how it can impact their product are more likely to gain a variety of benefits. They’ll be able to improve supply chain visibility, minimise expenses, enhance responsiveness, and increase customer satisfaction.
The difference between supply chains and logistics
A supply chain network encompasses many activities, including logistics. While the supply chain refers to the process of sourcing materials and manufacturing goods, logistics is responsible for the storage and movement of those goods.
The processes of design, production, distribution, and consumption of goods all come into play in the supply chain. Within distribution processes, known as logistics, the supply chain manages the movement of goods and how they are received by partners, retailers, or directly to customers.
Logistics is the process of planning and controlling the efficient transportation and storage of goods in a supply chain. Providers are responsible for smooth and proficient processes, delivering to manufacturers, distributors, retailers, and ultimately to consumers. This includes transportation, warehousing, and distribution activities that ensure products are available where and when they are needed.
The role of logistics in the supply chain is tactical and operational. Ensuring the right products are in the right place at the right time is a highly skilled activity. It’s also a top priority for brands that want to be associated with excellence and exceptional customer satisfaction.
Logistics processes include:
· Managing storage facilities
· Selecting modes of transportation
· Coordinating pallets of goods
· Liaising with distribution centres
· Processing and picking orders
· Inventory management
The importance of logistics
The critical role of logistics in the supply chain has a significant impact on manufacturers and brands for many reasons.
Customers associate a smooth delivery experience with the overall quality and professionalism of the brand. Negative experiences can quickly spread through reviews and social media, impacting a brand’s reputation.
Meeting consumer demands
Consumerism today has heightened customer expectations and loyalty can be fickle. Therefore, effective logistics is crucial for maintaining positive customer experiences, meeting demands, and building long-term relationships. The condition of the packaging and the product itself needs to be cared for to keep customers happy. Reducing product damage avoids damage to brand reputation.
Efficient logistics can help reduce time-to-market. By streamlining the movement of raw materials, components, and finished products, companies can bring products to market more quickly, meeting the growing needs of markets and consumers.
Convenience and promptness are of great importance to consumers. If they have to wait for your warehouse to be restocked, they could easily turn to another brand. Stock must be properly accounted for and maintained to meet these demands. Logistics involves managing inventory levels to avoid overstocking or stockouts. Efficient logistics ensure that products are available when customers want them, leading to higher customer satisfaction and loyalty.
Allowing flexible services
Third-party logistics (3PL) needs to be able to be flexible. Adaptability to changing customer preferences, last-minute urgent orders, and special requirements provide a more customised service. Modern logistics heavily relies on data and technology solutions for tracking shipments, optimising routes, managing inventory, and improving overall visibility within the supply chain.
Timely and accurate delivery of products is essential for meeting customer demands and expectations. Delays in deliveries can cause customer dissatisfaction and frustration. When deliveries are on schedule, the brands or manufacturers that created the product make a positive impression.
Communication is a major factor in customer satisfaction. When equipped with accurate information about delivery times, tracking, and potential delays, customers feel satisfied and comfortable.
Building trust and loyalty
Consistency is key too. Delivering on time every time builds customers’ trust. A company may have pulled out all the stops to create great customer experiences, but logistics providers must match that. Well-managed logistics can be a source of competitive advantage. Companies that excel in logistics can differentiate themselves by offering faster delivery, more reliable service, and better overall supply chain performance compared to their competitors.
All of the above filters through to the reverse logistics process too. Eventually, handling returns and exchanges may become part of the customer experience. Customer satisfaction comes from clear communication, efficiency, and ease.
Selecting the more efficient transportation routes, modes of transportation, inventory levels, and storage, logistics helps reduce storage and logistics costs. Logistics involves optimising the use of resources such as transportation vehicles, warehouse space, and labour. This leads to better usage of assets and reduced wastage. Maintaining the right amount of inventory at different points in the supply chain also helps minimise carrying costs while ensuring products are available for customers.
In essence, logistics ensures the right products are in the right place, at the right time. 3PL providers must also see that they arrive in the right condition. This is all fundamental to the success of a brand or manufacturer’s products.
To sum up, understanding the role of logistics in the supply chain enables businesses to build resiliency, make the most of their logistics investment, and ensure customer satisfaction.