One of the most essential aspects that determines a consumer business company’s success is its supply chain network. The main goal of doing business is to maximize profits, lower the cost of operations, and achieve customer satisfaction. Supply chain management is a vast field and critical for big and small organizations to deliver their products to customers effectively.
There are many stages of managing a supply chain network from procuring the raw materials, manufacturing, storage, and delivery of end products to the customers. Modern supply networks aim to streamline the processes and give a competitive edge to a business company over its rivals.
Traditionally, managing supply chains was quite complicated and challenging as there were so many interlinked tasks that needed to be managed for a proper supply chain to function. But, today, thanks to the advancements in digital technology, most of the work has become automated, which has increased operational efficiency. The supply chain is an important element of nearly every business sector and includes the Automotive, Aviation, Healthcare, Construction, and Consumer Goods industries.
The Importance of Logistics and Transportation in Supply Chain
Customers expect that the product they order is delivered on time and without any fault or damage. For example, if you order 2 different types of shirts from a specific clothing brand and only get one delivered or two of them with minor faults, then the image of that brand will be tarnished. Consumer brands and business companies rely on an efficient supply chain to reduce costs as maintaining inventory is not easy, and there must be a constant distribution of products to avoid the additional cost of storage.
Two of the key aspects within the supply chain network are ‘Logistics’ and ‘Transportation,’ in many places, both the terms are often used interchangeably, but there are certain differences between the two. Logistics is a broad term that refers to the management of storage and movement of goods and includes cataloging, handling, and packaging. On the other hand, ‘Transportation’ is the delivery of finished goods or products from the point of origin to the destination.
The logistics function begins with the procurement of raw materials and ends when the product is delivered. There are many functions within logistics that include procurement, production, and distribution of materials and goods in the right quantity. Transportation is the movement or delivery of goods, products, services, or animals through different modes that include air, road, rail, sea, or pipeline.
As the size of the business grows and expands, so does the supply chain network. An efficient logistics system can ensure cost-effectiveness in the movement of goods from origin to destination. Supply chains depend on changing consumer trends and demands. In business, the value proposition refers to quality and quantity and the fast availability of goods and services to the customers.
In these fast and competitive times, many businesses have to employ professional logistics providers to manage the supply chain from warehousing to delivery. A robust logistics and transportation system can ensure timely delivery and increased sales and profits. A business company has to develop a strategy to handle the supply chain effectively. Some of the crucial tasks that are included in transport and logistics requirements are
- Inventory management
- Compliance Import and Export Regulations
- Selection of freight for shipment
- Managing vendors
The role of warehousing and storage in Logistics?
The distribution of products in the market depends on supply and demand patterns. For example, in the winter season, the demand for suits and jackets increases, so a clothing brand must make proper scheduling and manage their inventory to meet the demand for suits and jackets. But there is always an imbalance between supply and demand.
The best solution is to store in surplus quantity and then meet the demands of customers. The logistics company usually have warehouses to store the products on shelves and racks. Many of the established organizations even manage the warehousing on their own. But small and startup organizations usually tend to employ a logistics company to handle their supply chain.
Inventory management is one of the most crucial aspects of storage and warehousing. Inventory refers to the amount for stock to hold, determining the place to hold the stock, and how much stock can be stored. Inventory management is controlling the number of goods coming in and going out from a warehouse. Today, there are modern techniques such as statistical tools and mathematical formulas to determine the inventory, such as past orders.
The last task of logistics is the transport of goods from one place or point of origin to the destination. Without proper transport, finished goods will be unable to move and disturb the entire supply chain. The numerous modes of transportation include road containers, cargo ships, freight trains, and air transport. The food items are mostly perishable, so they are transported through roads and within specific cities or regions while other consumer goods and products are transported by other modes.
The Impact of Transportation on Supply Chain
Transportation links the suppliers to manufacturers and brands to customers. The transportation experts work with inventory planners to ensure that the goods are available for the customer when and where they want them. There are many challenges that the logistics company has to face and resolve, such as
- Late deliveries
- Wrong shipment or delivery of the product
- Product incurring damage in transit
- The distance from the origin to the destination
- Any unfortunate incident that may occur in transit or delivery
The cost of transportation depends on the total expenses that have been incurred from delivering the goods from one place to another. The faster the delivery, the more its cost as compared to slower modes of transport. Moving the goods through airplane or ship costs considerably more as compared to delivery by road or rail.
In modern times, a logistics company has to deal with constant and numerous challenges and also plan for future growth and meet the expectations of business clients. One of the key considerations in supply chain strategy is how to manage an efficient, effective, and sustainable logistics and transportation service.