Have you ever thought about how the phone case, or any other product for that matter, you order online reaches your doorstep? That’s where supply chain logistics comes into play. This is a system that moves products from factories and warehouses to the delivery location. Supply chain management in logistics is what gets customers what they ordered. But this isn’t the only reason it’s important for businesses. Managing this process well helps companies save money, contributing to fast delivery and customer satisfaction.
In this article, we’ll learn how the supply chain logistics works, what steps are involved, the challenges companies face, and more. Let’s get started!
What Is Supply Chain Logistics?
Supply chain logistics is basically the part of the business operations that plans and controls how the cargo within the supply chain is moved from one place to another. As mentioned, it includes everything from transportation of raw materials to delivering the final product and even handling returns.
Both supply chain and logistics are two different things that most people often mix together. While the supply chain refers to the bigger process starting from manufacturing all the way to the final delivery. This can include a ton of different operations like vetting suppliers, analyzing prices, conducting material quality checks, and more.
Logistics, however, is only part of the entire supply chain and mainly focuses on the movement, storage, and delivery of the items. Given this, some of the key objectives of supply chain logistics include making sure that the:
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Goods are being transported from one location to the other in a fast and safe manner.
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Prices for transportation and delivery are kept within the allocated budget.
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Customers are receiving their orders on time.
Many people may overlook transportation, but logistics plays a key role in determining whether businesses succeed or not. Any challenges, such as delays or missing items, can halt operations, which leads to a loss of sales. It is necessary for companies to understand the core components of logistics within the supply chain to ensure that this does not happen.
What Are the Core Components of Supply Chain Logistics?
Each part of the logistics within the supply chain is essential for making sure that operations flow smoothly. These stages include:
Procurement
Before any company can deliver anything, it needs raw materials to make it. The logistics within the supply chain help OEMs or ODMs manage where those raw materials come from, how quickly they get delivered, and how they are stored. Inefficiencies within these logistical processes can cause factories to run out of material and pay too much for delays.
Transportation
Once the goods are manufactured, they will be shipped across national and international borders. The logistics team chooses the most suitable transportation method between sea freight, air freight, and road, while maintaining a balance between cost and speed.
Warehousing and Inventory Management
This stage is about where and how the product is stored until they are to be delivered to the end customer. This process involves inventory planning, such as tracking how many items are in stock, their location, and their delivery duration. The insights logistics teams derive from this tracking help companies avoid shortages and overstocking.
Supply Chain Fulfillment
This stage of the process starts when a buyer clicks the “Buy Now” button. In this stage, the ordered item is picked, packed, and delivered as quickly and efficiently as possible.
Reverse Logistics
Supply chain management logistics continue to play a key role even after the product has been delivered. In case a product is returned by the customer, logistics operators ensure that it is received, checked, repaired, and replaced or redelivered to the end customer.
How Does the Logistics and Supply Chain Work in Real Life?
Understanding how the process works in real life can help companies analyze their existing protocols and make the necessary improvements. Let’s say a customer orders a phone case online. For them, it’s as simple as clicking on a button and receiving the product in the next few days. But, behind the scenes, supply chain logistics does a ton of heavy lifting to make the process that simple. Suppose the product is likely to be made at an overseas location. Once it’s ready, it is transported from the manufacturer to the warehouse. This is where it’s stored until an order for it is placed. Depending on the location, this process can involve the use of one or multiple transportation mediums.
After the order is received, the product is picked, packed, and sent for delivery. This process is also called last-mile delivery, a process that ensures that the product is delivered from the warehouse right to the customer’s doorstep. To make this process work smoothly, companies may partner with different logistics service providers, such as a freight forwarder who organizes the whole international shipping.
In addition, these providers may also include courier services like FedEx or UPS and other third-party logistics (3PL) providers. Without these logistics operators, fulfilling even a single order can become an immense challenge.
Key Challenges in Supply Chain Logistics
First and foremost, one of the biggest issues is unforeseen disruptions, like pandemics, war, or even natural disasters. Regardless of the nature of the disruption, it causes factories to come to a halt, blocks delivery routes, and delays shipments.
Apart from that, cost volatility is another key challenge for logistics. Prices for fuel, containers, and transportation can change at any given moment, and when these prices increase, shipping costs more.
Maintaining the right inventory balance is another challenge. If a company stocks less than needed, it risks failing to meet customers’ demand. However, if they stock more than anticipated, the risk shifts toward having money tied up in products that are just sitting on a shelf.
Furthermore, companies may also not have enough labor resources or updated technology.
By understanding these challenges, firms may improve their supply chain logistics operations and minimize the impact of external forces.
How Is Tech Changing Logistics in the Supply Chain?
Technological advancements have had a great impact on every industry, and supply chain logistics is no exception. Logistics technology is now helping companies work faster and is providing them with in-depth insights.
For instance, warehouse management systems combined with tools like GPS or RFID tags help logistics operations as they track everything inside a warehouse facility in less time than a traditional approach. These insights can then be used by logistics teams to make informed decisions on a real-time basis while reducing the possibility of errors.
In addition, thanks to artificial intelligence and predictive analysis, businesses can be prepared for changes in demand and trends, ensuring they are one step ahead of the data.
Final Thoughts
Supply chain logistics is what keeps businesses running at a national or international level. These logistical operations cover the transport, storage, and delivery all the way from a product’s raw material being sourced to the actual product being delivered to the end customer.
Logistics in the supply chain is spread out across multiple stages and may involve working with external parties. While these operations have a unique set of challenges, adapting technology for better insights can help businesses address them and function efficiently.
Frequently Asked Questions (FAQs)
What’s the difference between supply chain and logistics?
The key difference between the two is that while supply chain operations deal with things like supplier selection and material quality and cover the entire process from procurement to delivery, logistics only focuses on the movement, storage, and delivery aspects.
What is last-mile delivery?
Last-mile delivery is a logistics process where a product is taken from a warehouse and delivered to the end customer. This part can often be the most challenging and directly lead to a positive or negative customer experience.
How is technology helping improve the logistics of the supply chain?
Using technology and gaining access to automation capabilities streamlines the logistics workflow. For example, predictive data based on scientific analysis helps operators make informed decisions.
