OVER the years, it is becoming increasingly apparent that the logistics function can easily spell the difference between success and failure.
It can make a difference between surviving and thriving in a competitive market. It can easily bear the burden of profitability or loss in any business.
Put succinctly, the line between disorder and order lies in logistics. Sound execution of logistics management rarely appears on the front pages of newspaper or on popular magazine covers, yet it has sincerely been credited for moving the needle for most organisational profitability.
There has been a noticeable recent ground swell of support for the rebirth of logistics management as a very important supply chain business activity. If Covid-19 taught us anything, it is that logistics management skills are an absolute staple for supply chain management success.
Logistics has morphed from a cost centre to a profit centre. It is no wonder that this function is slowly being regarded as a vital cog in supply chain renewal processes.
Contemporary businesspeople generally regard it as the heart, lifeblood, and backbone of an organization, all rolled into one. Logistics management happens to encompass value addition activities such as transportation, warehousing, inventory management, packaging and order fulfilment.
It is essential for businesses that rely on the movement of goods, such as manufacturers, distributors and retailers as it helps them meet customer demands, optimise their supply chain and remain competitive.
Effective logistics management also involves the active coordination and collaboration between and amongst various functional departments within an organisation to include procurement, manufacturing, transport and distribution, sales and marketing with a view to ensuring that the logistics process is aligned with the overall business strategy.
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Logistics management entails the physical fulfilment of a transaction and as such is the life of any economic activity. It is, therefore, regarded as the vertebral column of global trade and commerce.
Logistics management also involves effective coordination with suppliers, manufacturers and distributors, giving companies the opportunity to respond quickly to market demands, changes in customer preferences and unforeseen disruptions.
A well-coordinated logistics plan will facilitate the identification of potential supply chain bottlenecks while at the same time establishing contingency plans to manage risks such as supplier delays, transportation disruptions and natural disasters.
Creating a robust logistics management system extends well beyond managing the transit of goods. If your logistics management system is not aligned to your overall business strategy, there is a lot of work to do.
In an era where global trade is on the high, logistics management has proven to be the heart of an efficient supply chain. Everything in logistics is bound to affect the bottom line, one way or the other.
A robust logistics ecosystem will certainly give a fresh impetus and push for business leaders to remove guesswork out of supply chain planning.
The famous seven Rs of logistics include getting the right product, in the right quantity, in the right condition, at the right place, at the right time, to the right customer and at the right price. These seven Rs will demonstrate that the importance of logistics has never been more pertinent than in industry and commerce.
Logistics is generally regarded as the physical manifestation of a business transaction, without which, there is no exchange of cash resources between traders and customers.
Perceived benefits for a strong logistics management system include but not limited to the combined impact of improved customer service and or lower cost-to-serve benefits.
Other associated benefits include, improving customer experience, optimizing operational efficiencies, boosting profitability levels, better intermodal operations, and greater service delivery through intelligent route planning.
Logistics will facilitate the control of costs, location of operational inefficiencies, spot supply chain problems while providing flexibility and risk mitigation leading to improved customer satisfaction.
This business process will enable organisations to sense, learn, respond, and evolve like living organisms.
The age of e-commerce is upon us. Those companies with an eye and ear for new business opportunities will push for a big share in an era of automation where technology has taken a noteworthy place in logistics management.
The logistic function is exponentially leaning heavily towards the massive reliance on data-driven strategies.
With the predominant use of smart route planning, supply chain practitioners will be able to select the best routes to use while avoiding unnecessary traffic jams.
Smart route planning will make it easy for logisticians to monitor the status of drivers and vehicles, reducing empty miles while ensuring that the goods reach customers intact and on time.
Barcoding technology and RFID tags have also assisted logistics professionals by contributing towards efficiency and accuracy. Such technologies will be critical in providing valuable insight through progress reports, dashboards, charts and other features that enable supply chain professionals to make decisive decisions on the go.
Logistics management experts have developed sophisticated comprehensive tracking systems, which will make it easier for the customer to track and monitor their order status in real-time.
Providing tracking facilities is no longer an option, the market will expect supply chains to make sure it is in place by default. Control of product traceability will create added value for the supply chain practitioners making your organisation stand out from the crowd.
This will obviously create a sustainable edge over competitors by providing a level of service that stands above the rest.
Logistics specialists are also installing sensors on their trucks to assist in the capturing of data on reckless driving and hard breaking, which may affect vehicle tyres.
Such gadgets will also assist in monitoring the movement and location of the delivery trucks, monitoring idle time as well as safety issues such as tire pressure.
Data obtained through such tracking mechanisms will be relied upon to establish preventative maintenance process flows for the fleet. This will extend the useful lifespan of vehicle assets while at the same time reducing fuel consumption.
Logistics management is critical for managing inventory. Inventory is a vital element in every organisation’s balance sheet and in some instances directly affects the financial position of the company.
Inventory will create time utility value for the business. The inventory turnover ratio could be used as a barometer of the logistic management efficiencies. For most business organisations, time to market and effective distribution channels are critical success factors. There is need for logistics professionals to avoid unwarranted excessive surplus capacity as this raises fixed costs associated with bloated inventory.
Logisticians will be expected to maintain optimal inventory levels to balance customer demand and supply while at the same time minimising carrying costs and implementing inventory control techniques.
Where there are seasonal peaks and valleys, logistics management will be required to assist in managing the fluctuations.
Logisticians are required to monitor inventory levels when sales are down by ensuring that there are no redundant investments and unutilised resources which will create unnecessary waste.
They are also expected to be in control when there is a surge in demand, in which case, they will be required to facilitate upscaling.
Packaging is also key in logistics management. It entails the process of enclosing or encasing a product into suitable containers for easy of handling by customers.
Fragile or oversized products require special packaging. Supply chain professionals can protect their products against tampering, damage, and deterioration with the right logistics packaging. Standardisation will make packaging, warehousing and transport much easier.
Packaging can also be tailor-made to meet customs rules and regulations with the potential to minimise potential delays at ports of entry and to a certain extent preventing potential product damage while in transit.
Product packaging is also very important in brand promotion and marketing sales activities. Appealing packaging will assume the role of a silent unpaid salesman.
Proper packaging will promote easy of handling and use ensuring operational efficiency is achieved by delivering results to include reduction in logistics costs and enhancing customer satisfaction. Packaging materials that promote planet related agendas can easily provide a competitive edge in the eyes of the modern consumer.
In conclusion, it must be noted that at the root of every business lies logistics. Logistics is what drives cash flow. It so happens to be a make-or-break factor in supply chain.
Without logistics, the commercial world as we know it would grind to a halt. Every business organization will now require a powerful logistical edge to stay ahead of the curve. Logistics is no longer a back-office function operating in the background.
It is table stakes. It is the differentiator. What seems to hold everything in the business world is logistics. It will give your organization an opportunity to paint a new beginning. Logistics seems to run the gamut of the supply chain, starting at raw materials and ending at the last mile.
Supply chains will continue to wax and wane as we move into the future. But logistics management will continue to hold the promise of remaining the most visible link in supply chain management.
It will keep the world moving.
Whenever logistics management sneezes, the entire supply chain can easily catch a cold. Just like a broken bicycle chain, the entire system grinds to a halt.
In charting a future course, without efficient logistics management, a business cannot win the profitability war. It is my sworn perspective that nothing ever gets an organisation’s good name around better than an efficient logistics management system.
- Nyika is a supply chain practitioner based in Harare. — [email protected]
