Many of today’s industries are related to or influenced by the movement of goods from point A to point B. If we are to take retailers, for example, the transportation and logistics industry plays a key role in their success. Yet, despite this, many use the two terms interchangeably, without understanding the difference between transportation and logistics management.
Though both logistics and transportation are crucial in distributing materials and products, they tackle different things. Transportation deals with the movement of goods, while logistics handles the supply chain management of transportation from the manufacturer to the end-user.
And while both work with getting products and services from one location to another, logistics handles storage integration, cataloging, handling, packaging, and transportation. In other words, transportation is a subset of logistics and only includes the movement of products from one place to the other.
Here are some of the basic terms and their meanings according to Fourteenth Edition of the APICS Dictionary APICS
•Supply Chain – The global network used to deliver products and services from raw materials to end customers
•Supply Chain Management – The design, planning, execution, control and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure
•Logistics
• – The art and science of obtaining, producing and distributing material and product in the proper place and in proper quantities.
•Logistics Management – The part of Supply Chain Management that oversees the planning and execution of forward and reverse flow of goods and related information
What is logistics management?
In simple terms, Logistics Management is a component of supply chain management. It is used to meet customer demands through effective planning, control and implementation of the movement of goods. Transportation of goods can be made via air, sea or road freight and even pipelines.
Good logistics management is vital to a business success as it ensures the timely delivery of the organisation’s requirement for fulfilment of its products or services in an economical, safe, efficient and timely contractual manner.
Transporting goods via sea freight in a shipping container brings with it the challenges of import and export controls to ensure that the necessary legal documentation is in place to meet your country’s clearance controls.
Both inbound and outbound Logistics Management can be led by the organisation which may have their own in-house support team. This could also be outsourced to a 3rd party logistics provider (3PL) who can support both inbound and outbound logistics to meet the business’s needs.
The broader field of supply chain management includes logistics management as a component. The efficient flow of goods, services, and related information from the point of origin to the point of consumption is planned, carried out, and controlled by supply chain management. This is done to fulfil the demands of customers.
An operation is organized and carried out through a logistics management process. This is the process of working on a project from start to finish to ensure that both your own and the customers’ expectations are met.
As part of logistics management, resources can range from tangible goods (materials, equipment, supplies) to other consumables. As a result, logistics management deals with the flow of information and its management tools, materials handling, production packaging, inventory, transportation, warehousing and sometimes security.
It is common practice to model, assess, visualize, and optimize this challenging logistical task using specialist simulation tools. An expert in this discipline is a logistician.
Logistics management in business is applicable to all industries. Its goal is to manage project life cycles, supply chains, and the resulting efficiencies. Business logisticians have evolved into supply chain logisticians as businesses have become more complex and expanded into a global marketplace.
Although logistics management is usually applied to the shipping and distribution of goods, it has a much broader scope in today’s businesses.
Logistics Management can be divided into four major categories.
- Supply Management and Logistics
- Distribution and Material Movement
- Production Logistics and Management
- Reverse Logistics and Product Return
What are the main goals/objectives of Logistics Management?
Before turning to external help and investing in management technology, you want to ensure beneficial results. That is why it is essential to know how to measure the effectiveness of any new practices.
- Increase revenue
- Improve operating cost structure
- Improve customer service
- Increase in efficiency
- Route optimization –most optimised route to save costs (rail/road/sea/air – multimodal)
- Optimal mode of transport (air/sea/land)
- Improved warehouse and inventory strategies
- Resource optimisation – personnel multi-skill (cross functionality)
- Demand forecasting
- Competitive edge
- Visibility (make informed decisions based on data)
The practice of logistics management helps to raise the company’s revenue and to improve customer service, which improves the company’s standing and provides new income. Logistics management also helps to lower operational costs and monitoring the supply chain since everything is controlled within it.
The Role of Consulting in Logistics
Hiring consulting services in logistics is a strategic decision made by companies looking to have a competitive differentiator. Thanks to consulting, companies gain expertise, knowledge, and skills to make better decisions and efficiently reach the goals set for the supply chain.
In this sense, consulting companies specializing in logistics help clients understand and improve their supply chains and logistics operations: procurement; product processing and kitting; warehousing; and shipping. Its role is to analyse information to identify and solve logistics problems and give advice on productivity, management, and materials transportation issues using planning; design of distribution networks; technology and specialized software; and reengineering processes.
Why Do Companies Engage Logistics Consultants?
In a nutshell, a logistics consulting will identify, where they exist, ways for you to improve the efficiency of your existing distribution network and operation, boost productivity and help save on staffing and resource costs.
One aspect is that professional logistics consultants perform quite a different role to logistics managers, and they bring a different skill set to the table. Good logistics consultants will typically have some sound operational experience and also possess a high level of analytical capability. This needs to be allied to a potential to refine the important findings from their evaluation, and to successfully communicate and justify those pointers.
