Logistics and supply chain management were once well-known terms used by the military to describe the processes related to the transportation of equipment and essential supplies to troops on the front line. Today these terms elicit less of a militaristic association, but rather, one bound to the intricacies and expanses of contemporary Amazon warehouses.
Logistics management now refers to the comprehensive administration of a company’s resources (goods) from the initial product-building phase up until the moment it reaches a customer’s doorstep.
With an optimized logistics management process, companies can drastically reduce expenses, increase customer satisfaction, and improve supplier and distributor relations. Here’s how.
Logistics Management & SCM: The definitive guide
What is logistics management?
In short, logistics is the process of moving materials (whether raw materials or finished products) from one location to another, with the final destination being the customer or end-user. Therefore, logistics management is the process of planning and coordinating the storage and movement of these goods between different points in the supply chain.
Logistics management requires careful coordination to ensure that all those involved in the life cycle of a product are in the right place, at the right time, and to ensure that the final product always arrives at the correct destination in a prompt manner. Simply put—logistics management is a multi-step process to ensure the seamless movement from start to finish, or from origin to destination of a certain product. And since our customers are at the heart of our business, it is fundamental that our logistics operations are planned and carried out as efficiently as possible.
Supply chain and logistics, what is the relationship?
Logistics and supply chain management have many similarities, however, it is important to recognize that there are key differences that position the two activities as separate functions.
Since logistics refers specifically to the movement and storage of goods, it can be viewed as an activity within the broader supply chain network. Alternatively, supply chain management refers to the strategy and execution of the entire system that is involved in producing and delivering a product or service, from the very beginning stage of sourcing the raw materials to the final delivery of the product or service to its end-users.
While logistics focuses primarily on meeting customers’ needs and expectations (on time and at a good quality), supply chain management emphasizes the optimization of all the various processes that go into creating and delivering goods in order to gain a competitive advantage.
In addition to the objectives that may guide a company’s strategies and practices, the main goals of logistic management are related to reducing costs, increasing sales, and improving customer satisfaction where the movement of goods is involved. These goals can have observable short and long term benefits for companies.
Benefits of logistics management
If your company optimizes its logistics processes, you may see the following benefits.
- Rise in customer satisfaction and general sales, as well as a decline in company expenses, given that 52% of customers admit they would pay more for a product if guaranteed a good service.
- If a consumer orders a product that arrives on time and in good condition, your customer may most likely recommend your business to their professional and personal circle, raising both your Customer Lifetime Value (CLV) and conversion rates.
- The results from this positive experience naturally create a more extensive clientele due to the value your company brings to the customer, along with the growing reputation that you offer a stress-free and reliable customer experience.
- These benefits come together to provide a higher return on investment, giving your company a competitive advantage over competitors.
What types of logistics management exist?
There are four main types or categories of logistics management–inbound, production, outbound, and reverse.
- Inbound logistics management, primarily focuses on moving resources from suppliers into a company’s warehouses. This process includes the transportation of raw materials, construction tools, essential parts, and in some cases, even office equipment and supplies. Inbound logistics management is fundamental since disruptions in supply can cause delays in production that affect the rest of the entire supply chain.
- Production logistics management consists of all activities related to the different phases of the manufacturing process. It may include the planning and coordination of different materials from various suppliers that are required during production, as well as the transportation of goods from factories or production centers to warehouses.
- On the other hand, outbound logistics management is the process of safely and efficiently transporting the finished product from the warehouses to its distributors, who carry out the last mile delivery, so that the product makes it to its final and correct destination. Examples of activities in this type of category include (often repeated) loading, unloading, and tracking of materials and/or finished products, as well as inventory management.
- Finally, reverse logistics is the process of managing goods that have been unused during the production process or returned by end-users. The reverse logistics process includes the management of refunds and returns, but also the recycling or reuse of materials that went unused during production. Often, this material is included again as stock or inventory and placed in company warehouses or returned to its suppliers.
In addition to these four main categories, other types include, but are not limited to, third party (3PL), fourth party (4PL), and green logistics. This, of course, varies by industry and depends on each business and its practices.
What is a logistics manager?
Having experienced, professional, hard-working, and trained leaders is key to having an efficient and optimal logistics and supply chain.
A logistics manager is responsible for ensuring that the transportation and storage of goods runs smoothly and effectively throughout different stages in the supply chain. Other job titles such as fleet supervisor, shipping manager, logistics director, warehouse manager, distribution center manager and so on are often synonyms for the more general “logistics manager” title, since the duties and responsibilities are typically quite similar.
What does a logistics manager do?
If you were a logistics manager, your day-to-day may comprise of the following tasks:
- Planning, scheduling, and budgeting
- Liaising with suppliers, manufacturers, retailers, and customers
- Monitoring health and safety standards
- Keeping a focus on quality control
- Managing inventory levels, delivery times, and overhead transportation costs
- Supervising, training, and continuous support to warehouse staff
- Analyzing data and budgets to gain awareness of personnel and company-wide performance within the supply chain to improve processes
- Ensuring the process complies with current laws and regulations
For example, let’s pretend you work for Apple. To fulfill your incoming order of fifty MacBooks for one customer, your inbound logistics would involve requesting shipment of all the critical parts needed to build the computer from the ground up.
The production logistics would include the management of your different supplies to the factory, as well as throughout the different stages of production. The outbound process includes packaging the fully-built computer and safely and quickly delivering it to the customer, and in the event of any defect or unused material, your reverse logistics team would be employed.
Or, let’s say you’re a B2B modular construction company that specializes in selling kitchens and you have an order from a new customer who is located in different cities across the Southwest region of the United States. Your inbound logistics would involve the planning and ordering of all raw materials and resources that are required to construct your modular kitchen units.
From there, production logistics would include the storage and transportation of goods throughout the manufacturing process, and subsequently to the warehouses that hold the final-product until it is ready for distribution. The outbound logistics process will ensure that your kitchen units get to your customer on time and on budget. If excess material goes unused during production, or a kitchen unit is incomplete, your reverse logistics team will manage the return of materials or final goods.
CEMEX Ventures is committed to investing in startups that are transforming the industry in the area of logistics and supply management. Currently in our investment portfolio are companies such as PartRunner, GoFor, Voyage Control, and LINKX who are breaking new ground in the sector in order to improve and further digitize the logistics and supply chain processes.
PartRunner powers last-mile deliveries for the “big & bulky” by focusing on industries that have heavier and uniform items, such as construction, lumber, plumbing, hvac, electric, refrigeration, and more. The startup allows companies to connect with a network of hundreds of independent truckers via their web and mobile applications, as well as through API integrations.
GoFor industries matches the delivery requirements of distributors, retailers, and contractors with the appropriate lightweight to heavy-duty vehicles of its driver community inventory. They provide reliable, affordable, and timely delivery of goods to their customers and job sites. GoFor’s flexible, on-demand services allow businesses to supplement their busy fleets or choose GoFor as their exclusive out-sourced logistics partner for local and out-of-town deliveries.
Founded in 2016 by a team with extensive experience in the construction industry, GoFor is focused on the supplier and retailer supply chain and is exploring phenomenal growth across major urban areas in Canada and the United States. Looking ahead to the future, GoFor is poised for expansion in 20 major market areas in the United States, providing an indispensable tool for suppliers, distributors, and builders—turning the traditional cost center of delivery into a modern, customer-centric profit center.
Voyage Control helps construction companies and developers/owners manage their logistics and supply chains; this ranges from managing deliveries to sites to meeting compliance requirements.
The benefits of using Voyage Control include streamlining operational processes, enhancing security, reducing congestion, improving driver compliance, and protecting the environment. Businesses that benefit from using the platform not only include construction sites, but also clients in ports, events and facilities management. Over 100,000 businesses have used the Voyage Control platform to save time when making over four million deliveries across Europe, North America and Asia Pacific.
LINKX is a company that offers specialized software to optimize goods delivery. The company’s software solution provides control of deliveries and vehicles in real time, allowing for data-based decision-making and the facilitation of communication and information among all involved parties: shippers, carriers, and receivers.
Within the increasingly busy technological world of logistics, LINKX stands out for its user-friendly interface, robustness and convenient integration, and customer-centric focus. With LINKX, shippers or freight generators plan deliveries in a simple way, allowing them to assign operations to their own carriers or third parties. In addition, to enable visibility of shipment status and vehicles’ locations in real time, LINKX digitizes delivery vouchers, provides administrative advantages, and fosters fluidity in the billing process. Another distinguishing function of this delivery optimization software is its analytical reports that offer data-based conclusions about its logistic operation. Another segment that benefits from this platform are drivers.
LINKX allows drivers to schedule their services and functions as a co-pilot that optimizes their routes. This tool is able to collect signatures and offer graphic evidence for proof of digital delivery. Through LINKX, customers receive merchandise very easily, are informed at all times of the delivery process, and receive the same digital receipt. The platform allows them to assess the service, improve trust, and provide feedback to shippers and carriers.
Cemex Ventures’ vision in logistics management
At CEMEX Ventures, we know the challenges today’s world is facing all too well and empathize with the pain points that remain unsolved in the construction industry’s supply chains both in the United States and abroad.
We are dedicated to continuing to be a driving force in the sector by finding the most promising solutions for startups and entrepreneurs. To exemplify our commitment, we place our passion in four market-driven opportunity areas, one of which is the construction supply chain.
Are you what we are looking for to improve supply chain management in the industry? Apply today to our Construction Startup Competition with your original solution. Together, we can work to foster the construction revolution.