What Is Logistics Management? (Including Effective Tips)

By Indeed Editorial Team

Published November 9, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Supply chain management refers to the business activities and processes that get products and services to a destination. Logistics management is a component of supply chain management that helps companies plan operations safely and meet customers' expectations. Learning about this type of management can help you improve a company's service delivery and production activities. In this article, we define what logistics management is, explain its various types, provide tips for effective logistics-related management, state its importance, and highlight its distribution network.

What is logistics management?

Logistics management refers to all the processes an organization follows to plan, organize, and implement an operation. These processes help businesses meet customers' expectations and satisfy their needs. Logistics management involves planning, controlling, and implementing the effective movement of goods and services from an origin to a destination. Managing a business's logistics is a component of supply chain management (SCM).

SCM refers to the management of the flow of goods and services and the processes of transforming raw materials into finished goods. The management process differs between industries and businesses, but it typically starts with accumulating raw materials and ends with delivering goods to consumers. Many businesses plan their logistics activities in detail through analysis, visualization, and optimization to avoid complexity. They may also use software that enables them to understand who's responsible for various tasks and the current stage of the logistics activity.

Types of logistics-related management

Companies use the following four techniques to manage their logistics to reflect the different approaches to various stages:

Supply management and logistics

Supply management and logistics involve procuring the materials a production task requires and planning the time they get to the production venue. Upon arrival at the venue, the logistician, a professional in the logistics field, may first prepare a location to store the materials temporarily. They then plan the transportation of these materials to the production unit and examine the product the company is shipping to customers. Finally, they report any issues or state that they have no feedback.

Related: How to Become a Transportation Manager (With Skills)

Distribution and material movement

Distribution and material movement involve transporting stored materials to their desired locations. Its stages include loading, unloading, and transporting materials. It also involves monitoring the stock of the shipped materials, including how the warehouse and the stores that sell them use the products.

This type of management ensures that the stored supplies at the central warehouse and the goods that reach the retail store are the same. For example, a logistician may store furniture at a central warehouse until it's ready for shipping. They then confirm that the furniture leaving the warehouse arrives at the store correctly.

Related: Difference Between Direct vs. Indirect Distribution Channels

Production logistics and management

Production logistics and management refers to monitoring the transformation of distributed supplies into products. The process involves determining the best time to manufacture a product to meet business and customer needs. This step is necessary to ensure that when a store displays a product for sale, it can sell it and earn profits. This enables the store to request more of the same product.

Reverse logistics and product return

Reverse logistics and product return involve planning for materials recovery during the production phase. For example, if there are excess materials on a construction project, you can plan to return the excess to the stock. Reverse logistics also involves taking unwanted or unused products from a consumer who wants a refund.

Related: What Is Reverse Logistics? (With Steps and Benefits)

Tips for effective management of logistics

The following are best practices for improving the quality of your management processes:

Determine logistics goal before implementing a strategy

Understand your logistics goal before you create a management strategy. Numerous businesses carefully plan their transport logistics services to meet customers' expectations. Your aim may also be to enhance the company's efficiency or increase its revenue. Once you define the goal, you can create a robust strategy that considers all phases of the process and analyze all variables. Discuss with employees in each stage to gain their input, as this can assist you when deciding where to start.

Related: What Is 3PL? (With Definitions, Benefits, and FAQ)

Have a contingency plan

Before implementing your strategy, consider creating more than one plan. Those plans may act as contingencies if an unexpected event occurs. Point persons in production typically understand certain issues that disrupt the flow of the chain. Having discussions with these employees can help you develop effective backup plans and understand when to use them.

Related: 10 Careers in Logistics (With Salaries and Primary Duties)

Hire a manager

If you have enough in the budget, consider hiring an experienced manager to oversee the logistics operations. They can use their expertise to develop strategies that solve any problems that may occur. They also possess strong interpersonal skills to work with logistics chain employees and communicate with regional contacts to make last-minute adjustments regarding the supply of shipments.

Related: What Is Logistic Planning? (With Types, Steps, and Examples)

Automate manual and repetitive processes

Review the management chain to find repetitive and redundant processes and automate them. As these tasks typically take days, weeks, or even months to complete, they can result in late deliveries. By automating them, a company can increase customer satisfaction and loyalty.

Related: Supply Chain vs. Logistics (Definitions and Key Differences)

Establish communication paths with employees

Communication in the logistics field often determines the success of delivery operations. By establishing communication channels, you can better understand employee behaviours and how they affect the service process. Communication can also improve logistics chain efficiency in ways that customers may notice and praise. You can facilitate real-time communication using mobile solutions and instant messaging applications to help you synchronize operations. You may also organize meetings before and after every logistics operation to get reports from employees. These reports can help you identify and address challenges.

Learn from past mistakes

Document past errors so that you can learn from them. Learning from mistakes can help you improve the quality of future operations to mitigate future issues. For example, ask employees to note any major changes they make to processes so that you can discuss them at check-in meetings or formal review conferences. If errors occur due to task repetition, automate those activities to reduce the chance of recurring issues.

Importance of management to a company's logistics

By managing its logistics effectively, a company can derive many benefits. For example, it can ensure the transportation and distribution of goods and materials to their desired locations in an economical, timely, and safe manner. The company can also increase customer satisfaction by reducing delays and damages to products during shipment. Companies may record higher profits and fewer product returns. Efficient logistics management can also improve brand reputation and awareness and increase transparency in the supply chain. Companies can monitor their inventory properly, which can save them materials and reduce their carbon footprints.

Related: Outbound Logistics (What It Is, How It Works, and Tips)

What are the distribution networks for logistics-related management?

The success of this type of management generally depends on the synchronization of various units, such as suppliers, distributors, and consumers. Together, these units form a vast network. Each one performs its duty and ensures the quality transfer of responsibility to the next unit. The following are the various units that the distribution network consists of and their respective roles:

  • factories where employees produce goods and services

  • storage warehouses that store the goods for pickup

  • distribution centers that hold items that customers return

  • transport vehicles operators that deliver goods and services

  • retail stores that sell various goods and services to consumers at their locations

  • customers who complete the logistics chain and consume the products

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