What is the Definition of Logistics in Transportation?
Logistics was once a term primarily used in military operations. It referred to how the equipment and supplies were obtained, stored and moved. Military logistics were also concerned about the enemy’s supplies and equipment. When you cut off the enemy’s food, information, and armory, it’s easier to win a war. Modern logistics in business refers to the management of resources, from acquisition to transportation. It’s about the complex supply chain that includes the manufacturer, the warehouse, distributors, transporters, and retail stores.
How do logistics relate to transportation?
Logistics creates a blueprint of what happens to a product as it goes through the various points on its way to the consumer. Because transportation is such a huge part of the supply chain, logistics and transportation are highly connected. Logistics uses transportation to get products to customers. Logistics is the internal and external distribution network that helps you provide customer service.
With the advent of the internet, customer expectations changed. Today, many people order something and expect to receive it within 24 to 48 hours. To meet customer demands, companies have to improve their system to quickly ship items in the most cost-effective methods. Using logistics to manage the supply chain helps companies provide great customer service while managing costs.
Minimizing the cost of transportation reduces your overhead and increases profits. Logistics relates to transportation through finding better methods to get materials to manufacturers, finding suppliers closer to factories and reducing unnecessary transportation. The biggest organizations that ship products to customers have learned to use logistics to find a balance between efficiency and cost.
Transportation is one of the elements of logistics, not just to the point of customer delivery, but to assembly lines and distributors. Logistics means that your suppliers get the right materials at the same time to create the product. One lost shipment could shut down the system. Storing items in a warehouse costs money that your business may not want to expend at a certain point in the supply chain.
What is the difference between logistics and supply chain management?
The supply chain is the series of points that a product takes from production to customer. The supply chain is the network of suppliers of raw materials, the distributors, the vendors, distribution centers and retailers.
To demonstrate the difference between supply chain management and logistics think of the supply chain as the coach, while the logistics is the quarterback. The coach is concerned about every aspect of the game, not just what happens on the field. The quarterback takes the game plan and puts it into motion but has the ability to adapt as necessary.
Supply chain management involves all the facets of acquiring goods and delivering those goods. The supply chain is concerned about procurement and the cost of raw materials. The supply chain is the flow of the product, getting it from the farm to the customer’s table. It can include finance, marketing, engineering and much more. Supply chains optimize the production process to reduce costs and improve the customer’s experience.
Logistics often is just about the storage and movement of the product. The supply chain may have to be concerned about where a product is sourced, but logistics is how that source gets to the manufacturer. Should the product move by train, truck or plane? Logistics concerns itself with moving product to the right place at the right time.
Improving logistics within a business is not a one-size-fits-all solution because every business deals with logistics differently. There are ways to manage your logistics more effectively:
- Know your goals.
When you’re looking at your supply chain and logistics systems, know what you want to achieve. Are you trying to increase sales or customer satisfaction? Do you need to shave time off your shipping or do you need more product? You may have to work on one or two aspects at a time to create an efficient logistics plan.
- Plan and plan some more.
Logistics is about planning. The more you plan, the fewer interruptions to your operations. In logistics, you may want to have a plan A, B and maybe even C and D. You’re always going to run into unexpected problems, but when you have a plan, you can make better decisions about how to deal with those hiccups.
- Have the right people in place to deal with logistics.
Human resources are some of the most important elements of logistics. Your logistics managers need to be good with communication and people while having the ability to remain calm under pressure. The team that handles your logistics needs to be good with finances to balance cost versus speed.
- Use technical automation.
Logistics software refines processes that have an impact on your profitability. No matter how good your managers are, they cannot operate in today’s logistics operations without software that alerts them to problems and mismanagement in the supply chain. There’s no way that a good logistics system can manage without automation.
- Learn from mistakes.
Logistics is about improving operations. Your business is going to make mistakes. Instead of letting an error take your company down, discuss those mistakes and find ways to prevent them from occurring again. Be transparent with your team and discuss the issues that you’re seeing in the supply chain to find ways around them.
- Keep up with the changes.
Logistics management isn’t a set-it-and-forget-it operation. Suppliers may raise prices. Gas prices change the cost of transportation. The USMCA is coming up for ratification, which will change elements in the automobile market. Keep up with your industry and the import and export regulations to be aware of how your logistics operations will need to adapt.
In order to run a smooth supply chain, you must have a solid understanding of logistics, how to plan according to your goals, make adjustments as needed, and predict how outside factors might impact it.
Logistics and Transportation Management Systems
Knowing where your freight is and how it’s being handled is critical to logistics management. It is essential in today’s world to have an automated system that will track and alert you of any problems and important checkpoints in the trip. Partner with a dedicated logistics agent and expert in heavy load transport to take that aspect of your supply chain off your plate. Track your freight at every point on its trip and use the information to manage your freight operations with transparency and efficiency. It’s important to know exactly what’s going on with your product throughout transportation until it’s safely delivered to the customer.