What is Logistics Management: Meaning, Role & Objectives
From ensuring timely deliveries to customers to optimising complex supply chains, logistics plays a vital role in almost every business model. Proper logistics handling can help companies effectively reduce operational costs, achieve scalability, enhance customer experience, and boost profitability.
However, to reap such benefits, you must have a comprehensive understanding of what is logistics management, its importance, challenges, and more. Read on to learn more!
Logistics Management: The Basics
Logistics management forms an essential part of a business’s supply chain management. However, given its vast scope and complexity, we need to break it down into smaller sections in order to get a better overall idea.
Let’s elaborate on its basics:
Defining Logistics Management
Logistics management involves planning, implementing, and regulating the movement of goods, services, and related information from their origin to the point of consumption.
Ensuring that customers get the correct goods in proper condition within the promised timeframe is crucial. Moreover, logistics management facilitates supply chain efficiency, which reduces warehousing and transportation costs and enhances the company’s overall competitiveness.
The Role of Logistics Management in Supply Chain
Logistics management plays a crucial role in every step of a business’s supply chain. Its main objective is to assist with the operational requirements associated with procurement, manufacturing, and customer service.
Listed below are some of the major roles of logistics management in the supply chain:
- Order Processing: Order processing involves accepting customers’ orders, picking inventory, sorting goods, packing them, and shipping them to their destinations.
- Inventory Management: Inventory management entails determining and identifying the types and quantities of goods that a business needs to keep in stock to fulfil customers’ demands.
- Warehouse Management: Warehouse management refers to managing, storing, and safeguarding raw materials and finished products at centralised locations to ensure timely delivery to customers.
- Transportation: Transportation involves conducting efficient movement of goods between the various components of a company’s supply chain. It also includes route optimisation and automated routing in order to reduce transportation costs and ensure timely deliveries to customers.
- Fleet Management: Fleet management entails catering to all aspects of fleet operations and maintenance, like vehicle maintenance, driver management, route planning, asset utilisation, etc.
- Demand Forecasting: Demand forecasting in logistics involves estimating customers’ future demands by analysing current market statistics, historical data, and potential future events using statistical and analytical tools.
- Return Management: Return management includes all activities related to collecting goods from customers and returning them to fulfilment centres in case of returns.
The Main Objectives of Logistics Management
Overall, logistics management deals with the movement of goods and services within a business’s supply chain. This includes streamlining supply chain management, enhancing efficiency, cutting down operational costs and improving customer satisfaction.
Here is an elaboration of some of the main objectives of logistics management in a business:
Optimising Inventory Management
Logistics management is responsible for optimising inventory management by monitoring the supply chain and ensuring that the right products are always in stock, thus mitigating the risk of overstocking and obsolete inventory.
Additionally, by leveraging demand forecasting, transportation coordination, and efficient warehousing, logistics management ensures that goods and materials are replenished just in time to prevent excess stock or shortages.
Minimising Operational Expenses
Logistics planning can significantly reduce transportation costs through consolidated shipments and efficient route planning. Moreover, it can cut down on holding costs through efficient inventory management and optimised storage.
All these processes help businesses minimise operational expenses, which can help maximise their bottom lines.
Facilitating Optimised Supply Chain Process
Logistics management ensures the effective utilisation of raw materials and resources by facilitating their timely movement across various components in a company’s supply chain.
Additionally, it provides scalable solutions, enabling businesses to swiftly react to changing market demands, which usually come with seasonal surges, while entering new markets or increasing competition within a segment.
Logistics and Supply Chain Management – The Differences
Although logistics management and supply chain management may seem the same, they are, in fact, quite different. Here are their key differences:
| Parameters | Logistics | Supply Chain Management |
| Basics | Logistics deals with the movement of goods and services within a supply chain | Supply chain management encompasses various activities, such as planning, sourcing labour and materials, manufacturing, and delivering to end-users |
| Focus | Focuses on the timely and cost-effective delivery of goods and services to their point of consumption | Focuses on higher operational efficiency that can help lower costs and improve productivity |
| Objective | Customer satisfaction | Gain a competitive advantage |
The Role of Technology in Logistics Management
Numerous technological innovations have made logistics management more seamless for companies over the years. They enable businesses to streamline operations by enhancing monitoring capabilities, real-time data analysis and tracking, etc.
This, in turn, enables them to optimise their supply chain, enhance productivity, reduce operational costs, and improve customer satisfaction.
Advancements in Logistics Management Software
Here are some of the advancements in logistics management software that can significantly benefit companies:
- Automated warehouses enable optimum storage space usage
- Artificial intelligence (AI) tools for inventory management
- Utilising drones for faster deliveries
- Leveraging blockchain technology to facilitate secure transactions, etc.
The Impact of Technology on Supply Chain Management
AI and machine learning applications can analyse vast amounts of data, identify patterns, make predictions, and enable businesses to make smarter decisions. This can range from route optimisation to demand forecasting, identifying bottlenecks, minimising disruptions, and more.
Additionally, companies can leverage robotics and automation to replace manual processes, speed up tasks, and reduce the chances of errors. Such innovations allow businesses to streamline their supply chain management and effectively respond to quickly changing market conditions.
Challenges Faced in Logistics Management
Now that you know what logistics management is, its roles, and objectives, let’s take a look at its challenges:
Increasing Customer Demands and Expectations
Nowadays, customers worldwide expect super-fast deliveries, and that too without having to pay extra. Moreover, they demand options for real-time tracking of their shipments and proactive communication regarding the same.
Failing to meet these expectations leads to dissatisfaction and lost repeat business opportunities.
Globalisation and Supply Chain Complexity
Globalization has made a wide variety of goods and services available in the market, and they are available at reasonable prices. However, this has led to the development of complex supply chain networks across numerous countries involving multiple manufacturers, distributors and suppliers.
Handling such systems may not always be cost-effective, leading to increasing operational expenses.
Cost Management in Logistics
Rising transportation costs and customer expectations of faster deliveries can significantly impact companies’ logistics cost management.
Apart from this, fluctuating global trade tariffs, lack of skilled labour, and increasing market competition can also increase a business’s logistics costs.
Thus, understanding logistics management is necessary for businesses to solve such challenges effectively. Additionally, having a reliable logistics partner that can help companies deal with these problems is essential.
In this regard, Porter Enterprise is just what you need!
We provide cost-effective logistics solutions in 20 cities across India for a wide array of goods, including e-commerce products, agricultural items, FMCG, construction materials, chemicals and pharmaceuticals, and more.
Moreover, we provide on-demand two-wheelers, trucks, packers, and movers services to make logistics seamless for you.
Team up with Porter today and make logistics handling a breeze!
