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Why Logistics Is Important For A Business To Grow

What we mean by logistics:
Logistics is usually the specific system and implementation of a complex operation. In a usual business sense, logistics is the administration of the flow of things between the point of origin and the point of consumption to meet customers' demands or companies.
Five elements of logistics and their role:
The logistics elements help explain what logistics activities and processes are being undertaken in a supply chain.
There are five elements of logistics:
• Storage, warehousing and materials handling
• Packaging and unitization
• Inventory
• Transport
• Information and control

Let’s break this down:
Role of storage, material handling and warehouses in logistics:
It is to facilitate a regular stream of products to be supplied by manufacturers. Manufacturers need to work at top performance, but consumers tend not to require goods at the same rate as manufacturers give. There tends to be an unevenness between supply, steady, and demand, which is inconstant. It is necessary to store the excess goods produced by a manufacturer until consumers need them. To accomplish this, warehouse buildings are required. They need specialist storage devices such as shelving or racks. They also need material handling tools to move them around the warehouse and load and unload delivery vehicles.

Role of packaging and unitization:

A fundamental definition and one of the roles of logistics is the care and condition of a product. The packaging is an essential part of that. Unitization is also necessary as this helps storage and shipping. The easiest product to move and store is a cube, so packaging and unitization try to take all different sizes and shapes of product and pack them as near as possible into a cuboid shape.

Role of inventory:

Inventory is a logistics part that is nearly related to storage and warehousing. It is involved with what stock to hold, where the stock is placed, and how much stock to hold. In effect, inventory is managing the streams of goods going into and out of a warehouse. How is this accomplished? By looking at sales records of past orders and using multiple mathematical and statistical tools to predict how much consumers will require goods. Depending on how demand can be variable, it is a beneficial tool to help manage the flows of products through the supply chain.

Role of transport:

A significant element of logistics that most will understand is "transport." This involves all forms of transport, including road vehicles, freight trains, cargo shipping, and air transport. Without transportation, goods would be unable to move from one stage to another within a supply chain. Some goods with small supply chains, such as foods, do not travel far. Other, more complicated products consist of many elements that can be transported from all over the world.


Role of information and control:

"Information and control" are needed by all the elements to act as triggers to different operational procedures. We have mentioned the info required for inventory. Order levels help decide what orders need to be selected and packed in warehouses and enable the planning and organization of transport. Information and control's role is to help plan information systems that can control operational systems. They are also vital in the forecasting of demand and inventory, as already discussed.

Difference between different types of logistics:

Logistics management has four main types, each featuring a different aspect of the supply process. The four types of logistics are supply, distribution, production and reverse logistics.

Supply management and logistics:

Supply management includes the planning and coordination of materials needed in a particular place at a precise time to maintain production or activity (as in the case with military supply). Supply logistics must involve the transportation of the materials and storage. It also requires a system for estimating the level of supply at different stages of the process to make sure the flow of materials matches need. This can include getting all construction materials to a construction site or parts that are required for a manufacturing plant.

Distribution and material movement:

Distribution involves controlling how a supplied and stored material is then provided to the places it is needed. This includes material movement (loading, unloading, and transportation), tracking of stock, and responsibility (recording how the stock is used). This can also involve moving supplies from a primary warehouse to the racks of a retail store.

Production logistics and management:

Production logistics handle the stages of linking dispersed supplies into a product. This can include the coordination needed in a manufacturing or assembling process. In construction, production logistics will involve the staging of material at the right time to coordinate with the phase of the building taking place.

Reverse logistics and product return:

Reverse logistics includes the recovery of material and supplies from a production process. For example, in the logistics management of a construction project, reverse logistics plans for removing excess material and re-absorption of the material into a stock supply. It can also refer to the return of unwanted but unused products from an end customer wanting a refund. In past years, a whole industry has been designed to manage customer returns, including testing, refurbishment, and adding items back into inventory. A client may order something online that he never used. Before it can be sold to others, it should go through from a process to ensure that it will be fit to be sold to another consumer.

Reasons why logistics is so important:

A plan for logistics in supply chain management is critical to your success as a business and your consumer satisfaction. There are many factors in creating an efficient logistics plan, including automation, delivery time, and coordination. Here are some points that show the importance of logistics and supply chain management.
Logistics strategies produce positive business results.
• Logistics help businesses in building value.
• Logistics decrease costs for effective cost accounting.
• Logistics improve warehouse management.
• Logistics strategies increase customer loyalty.
• Logistics Plans Assist You to Transport Products on Time.
Top 10 logistics companies around the globe:
According to the IMARC Group, the world logistics market size reached US$ 4,963 Billion in 2019. The market is further proposed to reach a value of US$ 6,537 Billion by 2025, recording a CAGR of 4.7% during 2020-2025. The top ten companies around the world are:
1. J. B. Hunt Transport Services
2. C. H. Robinson Worldwide, Inc.
3. Ceva Holdings LLC
4. FedEx Corporation
5. United Parcel Service, Inc
6. Expeditors International of Washington Inc.
7. XPO Logistics, Inc.
8. Kenco Group, Inc.
9. Americold Logistics, LLC
10. Deutsche Post DHL Group

Name: Muzammil
Revised Date: 16-07-2020

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By Saha on October 19, 2021


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