Importance of Logistics In A Supply Chain Management

From the storage of raw materials to transportation of the finished goods, the supply chain department of a company looks at the entire journey and flow of goods. Supply chain management plays a major role in preventing the loss of raw materials and destruction of finished goods. It lowers the cost of wastage and errors.

It has a lot of components attached to it including proper planning, logistics, data management, and much more. Logistics is one of the most vital parts of the supply chain and includes suppliers, managing transition points, delivery, pick-up, etc. One of the major reasons for a business to hire a good logistics company is to ensure minimal risk of losses during the transition of goods and inventory. The proper handling by a logistics company is important for supply chain management and ultimately, affects the bottom line.

Here is how it plays an important role in supply chain management.

Warehouse Management And Design

A logistics company plays an important role in managing the storage of all kinds of inventory. Whether it is raw materials or finished goods, it needs to provide ample storage options for the kind of products they are moving and storing. For example, if the raw materials or the finished goods are sensitive to temperature, it is kept in cold storage and thus the warehouse must be designed accordingly.

Tracking Process

Every year, companies face huge losses due to the wrong shipment of products. A logistics company needs to have an advanced tracking system in place to ensure that the correct goods are picked up and delivered at their respective drop-off points during bulk movement. There might be instances where there are multiple pick-ups and drop-off points. Hence, Proper packaging, code numbers, etc. should be done to ensure that every shipment is made correctly and no confusion is created.

Managing Transportation

For a company to improve its revenue figures, Pointing out the most cost-effective transportation for every product category at the minimum costs is important. For example, in the case of perishable goods, the logistics company needs to organize fast and cold storage transportation facilities to ensure that the goods reach their destination without getting damaged. During such scenarios, the company can send goods by air for long-distance and short distances can send them in refrigerated units of trucks or trains. Otherwise, in the case of goods like toys or any non-perishable goods, transporting by ship can prove to be a cost-effective method.

Create Business Value

As better logistics improve merchandise and makes your products more available to an increasing group of people, wise business leaders consider it a very important tool in creating value for customers.

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