What is Supply Chain Logistics?

June 21 , 2023 | CATEGORY : SERVICES

The role of supply chain logistics as a specific function in the supply chain can be confusing. The terms supply chain and logistics have been used frequently in the same context but there is a clear distinction between the two. Supply chain logistics is about complete sourcing, processing, and delivery of goods to the end users, whereas logistics is related to the transportation and warehousing of goods. Supply chain logistics is therefore the coordination of the storage and delivery of goods in supply chain management. Supply chain management is a crucial function in any business, as it can help the operation achieve cost savings and competitive product pricing. It is also instrumental in enhancing the reach of the product to new markets. An efficiently run supply chain function can be the success factor for any company. Supply chain management uses sophisticated software and solutions to use data, and enhances their efficiency, raising the overall productivity of the company.  

Logistics can be considered as one of the parts of supply chain management. Logistics is about arranging the transportation, warehousing, and inventory of inbound and outbound materials.

The role of supply chain logistics

The supply chain machinery starts when a customer places an order and ends with the delivery of the order to the customer. The relationships and partnerships between suppliers, manufacturers, distributors, retailers, and end users are represented by the supply chain.  The supply chain brings together the interaction of multiple partners like suppliers, manufacturers, logistics, wholesalers, and retailers.

Supply chain logistics efficiently manages the resources related to the operation of the company. Supply chain logistics involves the various functions related to transportation, storage and warehousing, and inventory.

Warehouse design and management - One of the major functions of supply chain logistics is to optimize the design for the storage of raw materials and other goods at the warehouses. The warehousing strategy can be decided based on the company itself – sometimes warehouses are located close to the source of materials, or close to the consumer, or close to the shopfloors and factories, depending on the nature of material needed for that part of the operation. Logistics providers today use technology and automation to manage these warehouses, monitor them and ensure the smooth movement of goods to the various parts of the business.

End-to-end control – The logistics function is responsible for providing end-to-end control of the process, beginning from packing and labeling to loading the vehicles, and tracking the package to the delivery of the product at the retailer or customers’ doorstep.

Transportation – Transportation of the goods, whether finished products or raw materials must be planned for the fastest speeds, at the least distances, and the most economical rates. The supply chain logistics team uses several suppliers, in-house teams, and software to create routes for transport vehicles, ensure visibility throughout the process, and keep track of fuel costs.

Customers and duties – The logistics teams usually handle all the documentation and processes related to customs while making an international delivery.

A well-oiled supply chain logistics function can benefit a company

An efficiently managed supply chain logistics function can empower an organisation to grow in leaps and bounds.

Increasing the profitability with each delivery – By optimizing the supply chain logistics through automation, costs of materials and costs associated with delivery can be reduced. It enables companies to widen their profit margin and decrease the cost of delivery without compromising on the customer’s satisfaction.

Making the delivery process more efficient – Expert logistics providers speed up the delivery process while ensuring that the product remains damage free. Moreover, they also offer the personal touch that customers need, such as on-time deliveries, quick returns, and customer service availability.

Keeping losses in check and managing the associated risks - When it comes to transportation, to make the enterprise profitable, supply chain logistics should ensure that the losses associated with the return of products are under control. Damage made to the products while in transit would certainly incur increased costs.  

Value added by supply chain logistics         

Dynamic supply chain logistics helps organizations sail through the changing demands and trends of the markets and keeps the business ahead of the competitors by fulfilling the demands of the customers.

Logistics helps in maintaining a high level of customer service standards while reducing the costs of operations.

Ensuring a hassle-free process for customers, enhancing customer satisfaction, and cutting down expenses

By increasing the levels of customer satisfaction, the company achieves publicity in the form of word of mouth, which is the most effective form of marketing

By eliminating certain intermediary services, the overall cost of the products is reduced, thereby making the product more easily available for users

  • Types of logistics service providers
  • There are several types of logistics service providers such as:

Certain organizations have their own in-house logistics services to take care of the deliveries

some companies handle the delivery of products from the warehouse to the customer’s doorsteps. These companies take care of all the operations from shipping, packaging, as well as safety and security

Third-party logistics (3PL) are the logistic providers that offer various services such as shipping by road, rail, or air, as well as special cold storage facilities

Service providers that specialize in transporting returned products back to the warehouse of companies are called reverse logistics providers

Warehousing service providers not only provide warehouses for storing goods but also provide transportation services

Courier service providers only deliver products to customers

A robust supply chain adds a competitive advantage to the organization. It is responsible for generating profits while supply chain logistics enables raw materials, parts, and finished goods to move efficiently in the supply chain.