What is Logistics Management?
Logistics management consists of the process of planning, implementing and controlling the efficient flow of raw-materials, work-in-progress and finished goods and related information-from point of origin to point of consumption; with a view to providing satisfaction to the customer.
Types of logistics:
- Inbound logistics- which is concerned with the smooth and cost effective inflow of materials and other inputs (that are needed in the manufacturing process) from suppliers to the plant. For proper management of inbound logistics, the management has to maintain a continuous interface with suppliers (vendors).
- Outbound logistics-(also called physical distribution management or supply chain management); is concerned with the flow of finished goods and other related information from the firm to the customer. For proper management of outbound logistics, the management has to maintain a continuous interface with transport operators and channels of distribution.
Importance of Logistics Management
Effective logistics management is important to companies for a number of reasons, both positive and negative.
Good logistics management ensures that products are shipped in the most economical, safe, efficient and timely manner. This results in cost savings for the company and more satisfied customers.
In contrast, poor logistics management can result in damaged or delayed shipments, which can then lead to dissatisfied customers, returns and scrapped products. The consequences of these problems include higher costs and customer relation problems. In order to avoid these results, effective logistics management includes careful planning, proper software system selection, proper vetting and selection of outsourced vendors, and adequate resources to handle the processes.
Logistics Management Functions
To varying degrees, logistics management functions include customer service, sourcing and procurement, production planning and scheduling, packaging, and assembly. Logistics management is part of all the levels of planning and execution, including strategic, operational and tactical.
Further, it coordinates all the logistics activities, and it integrates logistics activities with other functions, including marketing, sales, manufacturing, finance and information technology.
Logistics Management Process
Logistics management generally consists of processes for inbound and outbound logistics traffic. Inbound logistics is the process of moving goods from suppliers into a warehouse, then into a production facility to make products. Inbound logistics can include raw materials, tools, component parts, office equipment and supplies. Outbound logistics is the process of moving finished products out of warehouse inventory and shipping them to customers.
Logistics processes also include reverse logistics or the management of all the functions used to return goods and materials. Reverse logistics takes goods from the customer or final destination and returns them to the originating organization, where they can be reused, repaired, remanufactured or recycled.