Logistics in the workplace: your complete guide
In France, the logistics sector is one of the most dynamic in the world, with almost 2 million jobs.
While logistics may sound like a mathematical function to you, we're going to focus mainly on the role and management of logistics in business.
Why do we do this? At a time when products need to be shipped faster and faster, it's essential to master the various logistics optimization tools to satisfy your customers and increase your sales.
What is the logistics function and what are its specific features? Understand each of its stages now, so you can make sure they run smoothly throughout the supply chain , and boost your performance.
What is the logistics function? Definition
Originally used in mathematics, François Verhulst's logistics function corresponds to an exponential (growth) function. It can be used to illustrate the state of diffusion of an innovation during its life cycle, and is very useful for boosting business performance.
In other words, the aim of the logistics function is to optimize production, distribution and information by reducing costs, and is central to any good supply chain manager.
It includes :
- supply of raw materials and semi-finished products (supply chain),
- production organization (quality control in particular),
- physical distribution (storage, handling, transport, distribution channels, after-sales, etc.).
In short, these are the logistics processes specific to sales, from storage to dispatch of your products to your customers.
What's the difference between inbound and outbound logistics?
Inbound logistics
Inbound logistics are all logistics activities that take place prior to the production process (storage and production). It covers the activities involved in providing a company with all its products (raw materials, materials, semi-finished products, etc.) within the timeframe and in the quantities requested.
Who is involved, and why?
A player offering inbound logistics services carries out all the necessary operations starting from the storage location and ensuring the transport of products to the production or assembly warehouse.
Its tasks include
- manage raw materials procurement,
- select suppliers,
- ensure proper receipt of products,
- optimize purchasing.
As you can see, logistics aims to optimize physical flows in order to deliver the best possible quality of service in line with a customer's needs and expectations.
Downstream logistics
Downstream logistics, or distribution logistics, is the set of logistics activities whose aim is to make finished products available to customers. It involves delivering products directly to consumers.
It's important to choose the optimum quantity you want to deliver to your customers, but above all to do so under the best possible conditions. Indeed, if your products are damaged in transit, or even missing altogether, customer satisfaction will suffer.
Downstream logistics covers :
- planning logistics projects,
- output order,
- packaging,
- warehousing
- order preparation,
- transport and delivery to the end customer.
Why develop your company's logistics function?
Now you know what a logistics function is, but why is it so important for your company?
Coordinate to optimize
Logistics is essential for everyone in your company, because it is a cross-functional function, in other words, it links all departments together as efficiently as possible.
In short, if you get the organization and mobilization of your company's various departments right, the time you save can be reallocated to other activities.
Logistics is as practical in the short term (coordinating physical flows) as it is in the medium and long term (organizing and optimizing production, distribution and storage systems).
Optimize to be more competitive
When used correctly, logistics organization can give you a competitive edge. It enables you to stand out from the competition and boost your sales.
Adopting a more efficient supply chain organization than your competitors opens up new possibilities. For example, your choice of suppliers will be more diversified and qualitative. If you have a reputation for optimizing your logistics function, it stands to reason that other companies will want to work with you.
The 3 advantages of the logistics function
Quality of service
Quality of service is naturally at the heart of customer relations. Indeed, it is a key factor in customer satisfaction. Let's not forget that satisfied customers are more likely to tell their friends and family about your products, thus bringing in new customers without incurring additional advertising costs for you.
In addition to inventory management, logistics management enables you to track products in circulation and ensure that they reach their destination on time.
Last but not least, optimized logistics management implies serious tracking of parcel shipments. Respecting delivery deadlines and ensuring that all products arrive on time are essential to customer satisfaction.
Customer satisfaction stems from a number of factors:
- speed,
- regularity
- punctuality of deliveries or production,
- respect for the intrinsic qualities of the product,
- the accuracy of product-related information flows,
- optimized after-sales service.
Make sure you apply these elements to maximize your customers' satisfaction.
Advantages:
- Reduce costs (inspection fees, rework, loss of raw materials),
- you increase your productivity,
- you don't need to make major investments (only a deep commitment).
Cost control
The company's logistics function manages flows as efficiently as possible to reduce the following main costs:
- procurement costs,
- routing costs,
- production costs,
- storage costs.
You can use these indicators to measure the performance of your established system and assess where you can improve:
- for procurement: availability rates and delivery times,
- for inventory control: monitoring stock value, write-downs and stock coverage,
Tip: Wilson's formula is perfect for determining your optimum order quantity. - for transport: average cost per product and filling level of the means of transport.
Some indicators are difficult to identify, such as the cost of insufficient stock rotation, but the more you identify them, the easier it will be to reduce them.
How does an efficient logistics function help lower your costs?
Here are a few ideas:
- optimize packaging by using all available space in packages, cartons or pallets, and make sure you don't send half-empty parcels,
- fill containers as fully as possible for the different types of transport you choose,
- reduce the weight of your shipments.
Tip: set up a transport plan that identifies flows and different types of traffic, and concentrate only on those that cost you the least. - change your logistics providers according to your needs (find the right balance between price and quality of service, such as geographical area, lead times, careful handling of parcels, etc.),
- optimize your logistics function with new technologies (software, applications, web platforms such as Transport Management Systems or WMS to improve warehouse logistics management).
Brand image
Good logistics have an impact on a company's branding, since they are often the only physical point of contact between buyer and supplier. Good branding gives your company a positive, easily identifiable image.
Image is considered more effective and encourages commitment. It stems from the characteristics of the products and/or services offered, and when the perception of the brand's image is positive, it favors the marketing of the product, and therefore can justify the practice of high prices.
So, by developing your logistics organization and responding to your customers' needs as described above, your customer network will be all the more developed, and so will your performance.
Article translated from French