A healthy logistics and supply chain is essential to the overall success of your business. It will determine your sourcing and procurement costs, shopping and delivery capabilities and your profits and long-term revenues. The more you can optimise your logistics and supply chain, the more you can cut costs and improve your yield. Here we delve more into logistic and supply chain planning and optimisation to see where you can make those all-important changes.
What is logistics management?
Logistics management involves the planning and implementation of an entire supply chain operation from beginning to end. When done correctly, it enables you to optimise systems for storage, tracking and the delivering of goods and services to your customers, improving productivity and increasing revenue as a result.
The process is divided into inbound and outbound logistics; inbound logistics deals with the acquisition of goods and materials and outbound logistics is about the delivery of goods to customers.
How to optimise your supply chain logistics?
There are some supply chain and planning optimisation practices that when implemented will work for most companies operating in any sector. This includes things such as:
The introduction of automation can be a huge game changer for your business, saving time on manual and repetitive tasks. There is an ever-increasing variety of automation tools available to warehouses, including robots, drones and AGVs. Supply chain optimisation software, such as a warehouse management system will complement automation tools and help you get more from any efficiency gains you make.
Improving communication across internal departments is vital to optimising your supply chain logistics, enabling you to reduce errors in logistical management. The more transparent you can be, the more you can learn from each other to introduce new ideas that streamline processes and help you find consistent, long-term gains. This also extends to your suppliers, helping you to ensure timely fulfilment of demand and enabling you to plan effectively to deal with issues effectively.
Identity errors to reduce costs
There will likely be errors in your logistics that are not immediately noticeable but once identified can help you to remove unnecessary costs. These can be spotted by carrying out an audit or using an operations management system, helping you to find solutions to resolve them. For example, if you are experiencing a high number of incorrect or late deliveries, you could utilise software that tracks and optimises routes to improve the outcomes.
You could also consider outsourcing work that your business doesn’t have the expertise or time for, especially if it can help you to scale up operations. This is something that many ecommerce businesses do in the first instance, using providers to take care of packaging and deliveries, enabling them to dedicate efforts to increasing sales. Further down the line you can reincorporate this back into internal processes if needed.
Understand customer requirements
Your customer’s experience has a direct impact on how successful you will be, so this aspect always needs to be considered. You should be aware of what they want and when they buy, so you can better optimise your logistics to support increases and falls in demand. Some businesses are going to be busier at certain periods of the year, so optimising the logistics to ensure they are ready to go ensures they can avoid any damage being caused to the brand.
Supply chain optimisation software will give your business a much better chance of working cohesively as a whole. There is a host of options available that will integrate various departments together to streamline processes across the board. For example, choosing the right supply chain optimisation software could help to increase sales, improve inventory control and better manage financial systems as they work in conjunction with each other. Relevant data is pooled into a central databased which all various systems have access to, helping to make improvements all round.
Responsive supply chain planning and optimisation should use a responsive multichannel approach. If you run an ecommerce business, inventory management is vital to ensuring you remain efficient, while suppliers need to receive strong and consistent communication. Just as importantly, introducing a multichannel approach will allow you to plan and also give you more clarity when it comes to forecasting.
Receiving data is one thing but having the right system in place to analyse it is crucial. This will help you understand your market and customer requirements, which ties into the type of products your provide and how it is delivered. Good supply chain optimisation software will give you the tools to sift through large amounts of data to identify the right information that can help your business continue in the right direction and expand.
Supply chain optimisation models
There are a number of supply chain planning and optimisation models your business can adopt:
Tier 2 supply management
This focusses on optimising behind the scenes suppliers – those that supply your suppliers. Reach out to them and negotiate and the more savings they enjoy, the more it will benefit you and you customers.
Supply inventory management
The more inventory your supplier carries in relation to your business, the more it costs to house and manufacture. Better communication can change this so inventory levels are optimised at the right time, and you have a better understanding of supplier lead times.
Cost of Goods Sold (COGS) management can be used to lower your overall product costs. It means negotiating on a regular basis with suppliers and vendors. The goal is to ensure vendor processes are optimised for your needs, lowering production costs and increasing profits for you.
Logistics management is about achieving the lower shipping and delivery costs without affecting the customer experience and meeting their expectations. Detailed demand forecasting is a must, along with strong management of supplier lead times. Consider using requests for proposals when looking at supply chain vendors, as it gives them an opportunity to present cost saving solutions that you may not have considered just yet.