Question

What are the primary logistic functions in a supply chain? How are they related to each other? How do they interface with the firm’s overall business strategy?

Answer 1

The primary logistics functions in supply chain

1. Order processing

The purchase order placed by a buyer to a supplier is an important legal document of the transactions between the two parties. The commercial department is the one who ensures that the payment terms and the delivery terms have been met and then processes the order from within the company. It requires coordination with suppliers to deliver the materials without any delays.

2. Materials handling

Material handling is the movement of goods within the warehouse. It involves handling the material in such a way that the warehouse is able to process orders efficiently. Although it may sound a mundane task, it is an important one and an ongoing activity in any warehouse.

3. Warehousing

Warehousing is the storing of finished goods until they are sold. It plays a vital role in logistics operations of a firm. The important point in warehousing is that the warehouse should be nearby to the dealer or the distributors’ place and it should facilitate the easy delivery of goods.

4. Transportation

When an order is placed, the transaction is not completed till the goods are physically moved to the customer’s place. The physical movement of goods is through various transportation modes. The better the warehousing and the inventory management of a company, the lower is the transportation cost for the company.

5. Inventory control

Inventory management is to keep enough inventories to meet customer requirements, and simultaneously its carrying cost should be lowest. Inventory management is one of the most important functions of logistics especially after the adoption of various production techniques such as Just in time manufacturing, lean manufacturing or other manufacturing processes where the cost of inventory management is brought down.

6. Packing

Packaging the product is a responsibility of the logistics team because otherwise the product will reach damaged to the end customer and this is a huge cost to the company. Logistical or industrial packaging is a critical element in the physical distribution of a product, which influences the efficiency of the logistical system. It differs from product packaging, which is based on marketing objectives.

Logistics in supply chain management

The main role of logistics in supply chain management is primarily to increase the overall value of each delivery, which is identified by customer satisfaction. This means that the reduction and optimization of labor resources must be tied in with keeping up a certain level of quality customer service. Logistics is the management of physical, informational and human flows in order to optimize them and avoid unnecessary waste of resources. The purpose of efficient logistics management is to achieve maximum competitiveness and profitability of the company, as well as the entire network structure of supply chains, including the end user. In this regard, the integration and introduction of innovations into the processes of supply chains, as well as into the processes of logistics, should be aimed at increasing the overall productivity of all their participants.

The choice of the right software also plays a significant role in optimizing logistic tasks. After all, automation today is at the head of the progress for industrial enterprises.

Importance of logistics functions and supply chain management in overall Business strategy

A company should always align their supply chain strategy with their overall business strategy and customer needs. As a result, a solid supply chain strategy will greatly benefit your business in the long run. It will not only aid in alleviating pressure today, but it will also benefit supply chain managers who may have to adjust to changes in the future.

Supply chain management has a huge impact on business. Good SCM can directly improve customer service. The right product and the correct quantity must be delivered in a timely manner, to appease both producers and distributors. Consumers want to be able to know the location they must go to obtain the goods that they want. Implementing an operative supply chain management strategy is essential to efficiently transfer products throughout your supply chain. Logistical considerations have always played a strategic role in business.

Consumers also want a high standard of customer support. If goods are not distributed on time, supply chain management branches of a company have to assure them that they will get their products as soon as possible. SCM also has a huge impact on the bottom line of a company