Insight About Logistics and Supply Chain Management
In this present business oriented era there are certain factors which must be given supreme importance. Operational efficiency is crucial in order to stay ahead and gain effective outputs. For well-established as well as budding enterprises it is necessary that they seek advantages from supply chain management (SCM) schemes. It does not matter if your business is small or big. A smart and sensible approach towards logistics and SCM will work wonders. Let us try to understand these two concepts in a well detailed manner.
Logistics and Supply Chain Management is not correctly known by many people that does create a lot of confusion. In simpler words, Logistics refers to functions within a single organization whereas supply chains deal with networks of companies that operate together. Under logistics the main focus is on actions such as procurement, distribution and inventory. Supply Chain Management has a wider branch that deals in marketing, finance as well as customer service.
Logistics is company centric that can be defined in a number of ways. Logistics Management is the apt term that focuses on the efficient management of the different processes that are related to the production and transportation of the company’s finished goods. There are two sub-categories under logistics which needs to be learnt for better understanding.
- Inbound Logistics: Inbounds Logistics is basically the incoming of raw materials and other goods from the suppliers to the company.
- Outbound Logistics: It deals with the movement of processed goods from the company to the market, that is, customers.
Transportation & Logistics
Transportation and logistics are combined together when referring on a broader canvas. But in reality these two elements work together but under segregated processes. Transportation basically deals with the movement of goods via land/air/sea along with customs and warehousing facilities. On the other hand, logistics has a slightly different functioning when transportation is tagged on. It deals with consulting and information technology.
How to Improve Logistics?
Under logistics, there are several ways which can be implemented in order to improve costs as well as delivery speed. Transportation Management Systems (TMS) are quite helpful in improving logistics. They are useful in finding the best routes & lanes for swift shipments. TMS is rated as quite beneficiary when it comes to shipping management. It is also a good support for trading partner collaboration and freight optimization. You can count on TMS for offering huge savings to the logistics partner as well as customer.
What exactly is a Supply Chain? It is a network of organizations that are connected through various links due to the involvement in different processes that deal in products and services. On a broader view if we need to define Supply Chain Management, then we will focus on the main elements that are integrated together to form this system. The structure involves Supplier, Manufacturer, Wholesaler and Retailer. Under SCM, there is a flow of information, material as well as money.
Importance of Information Sharing
If the information is not passed down to different elements present in the supply chain structure then there might be a hike in cost. For example- Suppose the demand data of 100 units is not passed down from the retailer’s end and each player in the structure tends to keep a stock higher than the required quantity. This will ultimately result in higher cost for every player in this chain. On the other hand, if the information is passed down, then everyone will keep the stock according to the demand and cost will be lowered.
How to Improve Supply Chain Management?
- In order to improve SCM you need to hold onto certain factors. One of them is the integration of logistical processes when it comes to suppliers. It does not matter what is the size of your business. The availability of logistical connection with the suppliers for any enterprise is important in order to facilitate quick transfer of information.
- There are several enterprise resource planning (ERP) applications that are helpful in forming communication between a company and its supplier network. This will prove helpful for improving operational efficiencies for both the parties.
- The selection of an ERP system must be done wisely. You need to check if the selected ERP matches with the existing applications & processes.
Shiprocket is India’s first automated shipping software that aims reduce eCommerce shipping to its bare bones. We have taken a step forward in simplifying eCommerce for Indian merchants and saving their precious time and money.