Logistics management 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.
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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 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 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.
Main goals
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
Inbound logistics primarily focuses on moving resources from suppliers into a company’s warehouse, and from there to a production facility. 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
Production logistics 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.
Outbound logistics management
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.
Reverse logistics
Finally, reverse logistics is the process of returning goods from the customer back to the distributrion center. 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.
Cemex Ventures’ vision for logistics management
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 GoFor, LINKX, PartRunner, and Voyage Control who are breaking new ground in the sector in order to improve and further digitize the logistics and supply chain processes.
- GoFor: GoFor helps customers solve the challenge of delivering building materials by matching 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 customer 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.
- LINKX: LINKX offers specialized software to optimize goods delivery. The company’s software solution allows for the control of deliveries and vehicles in real time, permitting data-based decision-making and facilitating communication and information among all involved parties: shipper, carrier, and receiver. Within the increasingly busy technological world of logistics, LINKX stands out for its user-friendly interface, robustness and convenient integration, and customer-centric focus.
- PartRunner: 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.
- Voyage Control: Voyage Control helps construction companies and developers/owners manage their logistics and supply chains; this ranges from managing deliveries to site to meeting compliance requirements. The benefits of using Voyage Control include streamlining operational processes, enhancing security, reducing congestion, improving driver compliance, and benefitting the environment.
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. Cemex Ventures is dedicated to continuing to be a driving force in the sector by finding the most promising solutions for startups and entrepreneurs.
If you have a technology or business model that improves construction’s supply chain and you want to earn capital, pilot in real markets, and expand your network, contact us today. We will be sure to write you back as soon as possible. Let’s keep fostering the construction industry revolution!