Storage and logistics are two main and most important components of the supply chain. Storing means holding, organizing, and managing stock in a warehouse or a distribution center. Logistics refers to the planning and execution of the movement of goods or products from suppliers to the warehouse or from the warehouse to the customer. Optimizing storage and logistics can reduce supply chain operation costs, ensure product availability, and increase brand trust in the market.
What Is Storage and Logistics?
Storage logistics is an important driving factor in the success of any business’s supply chain process. It involves the management of inventories, warehousing, and transportation of goods so that they can be delivered to the customer on time and in absolutely good condition.
Improper storage logistics can cause late product delivery and decrease brand reputation.
The various benefits of the storage logistics system are underlined below.
1. Real Time Inventory visibility
Proper storage logistics provide real-time inventory visibility to businesses. It anticipates customer demand efficiently and ensures that the right amount of products is always available in the warehouse to meet the customer demands.
Again, effective inventory storage management reduces the costs of the business by avoiding issues like overstocking and out-of-stock problems.
2. Enhance Warehouse Efficiency
The latest advancements in storage logistics, like automated order fulfillment and robotics automation, have increased the efficiency of picking and packing in warehouses. They have even increased space in the warehouse so that you can store more goods and products in an organized and efficient way.
3. Improves Customer Service
Storage logistics automates various complex storage operations and fulfills orders faster, which enhances customer satisfaction.
Difference Between Storage And Warehousing
Storage refers to keeping goods or products in a designated place for a short or long period. However, warehousing refers to the storage of goods in a systematic and organized way so that businesses can fulfill customer orders on time.
What Should A Business Consider While Planning Storage Logistics?
1. Space Availability
A business should consider the space availability while planning the storage logistics. It should ensure that the space should be enough to store all the items in an organized manner.
The business should take into account several factors, such as the size and shape of each product, how much each product will occupy space, and whether there is any requirement for additional shelving.
2. Budget
Consider the budget while planning storage and logistics. Try to keep the logistics cost down by maximizing efficiency.
Storage logistics costs vary depending on various factors. For example, renting a storage facility will depend on the size, location, and other associated costs, such as insurance.
3. Staff
The business should ensure that it should have enough experienced staff to meet customer demand. Inexperienced staff may not fulfill customers’ demands on time, which affects the brand’s reputation.
Different Types Of Storage Logistics
There are various types of logistics and storage, which are underlined below.
1. Centralized Storage Logistics
Centralized warehouse storage logistics involves managing all the inventories in a single facility. This is beneficial for organizations that have to manage high-order volumes.
2. Decentralized Logistics
Decentralized logistics refers to the distribution of goods or products in multiple warehouses or distribution centers which are located in different regions. This approach allows a business to quickly respond to local demand and fulfill orders.
3. Traditional Storage Logistics
It includes traditional material handling equipment for managing inventories. It involves less investment and is particularly beneficial for companies that handle moderate product volume.
4. Automated Storage Logistics
It uses automated warehouse systems and advanced technologies to manage goods and products. Automated systems can reduce errors and increase the efficiency of various logistics and storage processes. It is ideal for businesses handling fast-moving inventories.
Logistics And Storage: How They Work Together
Logistics and storage are two interconnected components of the supply chain that work together to ensure smooth operations. Efficient warehouse storage solutions include inventory management systems and optimized warehouse layouts. These factors play a crucial role in reducing delays and improving order fulfillment. Logistics ensures that stored inventory is transported efficiently using the best routes and methods. When logistics and storage are well-coordinated, businesses can minimize costs, prevent stock shortages, and improve overall supply chain performance.
The Relationship between Storage And Transportation
Warehousing and transportation teams work together to fulfill customer orders on time and guarantee seamless supply chain operations. Goods or products are stored inside the warehouse. The ordered product is picked from the warehouse shelf when a customer places an order. It is properly packaged, labeled, and then handed over to the transporters. A proper transportation mode is chosen for product delivery. While the warehousing team is responsible for storing, managing, and preparing inventory for dispatch, the transportation team ensures timely and efficient delivery to the customer. Effective coordination between both teams helps in reducing order processing times, minimizing delays, and optimizing logistics costs.
Supply Chain Challenges Related To Logistics And Storage
Storage Challenges
- Poorly planned storage can lead to congestion and delays in fulfilling orders.
- Improper demand forecasting or inefficient product tracking can lead to overstocking, which can increase the warehouse holding costs of the business. Simultaneously, it may lead to out-of-stock issues, which can decrease customer satisfaction.
Logistics Challenges
- A rise in fuel costs can increase the logistics cost of the business.
- Pandemics, traffic, or bad weather can cause supply chain disruptions. It can cause delays in product delivery to the customers.
Best Practices For Reducing Storage And Logistics Costs
1. Third Party Logistics Provider
Fulfilling customer orders on time is one of the most important priorities of the business. However, when the business expands, managing various supply chain operations can be quite tough for a business.
Delays in order delivery can decrease brand reputation in the market. Hence, businesses can outsource the supply chain operations, such as storage and shipping, to third-party logistics providers. It can reduce the cost of a business and enhance the supply chain operations.
2. Implement Advance Technology
Manual operations tracking of each inventory or picking and packaging all the orders require a lot of time and effort. It can even lead to errors. Leveraging advanced technology like warehouse automation or utilizing a warehouse and inventory management system can track and monitor inventories in real-time.
They can enhance the efficiency of both picking and packaging operations, and thus, it can lead to fast order fulfillment. Warehouse automation can even reduce manual errors.
3. Implement Just In Time Inventory Management Model
JIT’s (just in time) inventory management model will reduce the storage holding costs of the business. It will receive the goods or products only when required for sale. However, businesses need to collaborate with reliable suppliers to ensure on-time deliveries to customers.
4. Use Optimized Routes For Good Delivery
Businesses need to use advanced technology like transport management systems to choose the optimized route for goods delivery. It will help to reduce the logistics costs and lead to faster delivery.
5. Use Regional Warehouses
Look for warehouse storage that is near to your customers. Warehouses closer to target markets can reduce shipping costs and time.
Warehouse Storage And Logistics: Optimizing Your Space
Let’s discuss about the major component of warehouse storage and how companies can optimize their warehouse space.
Key Components Of Warehouse Storage Logistics
- There are racks, shelves, or pallets to organize the goods inside the warehouse efficiently.
- There are forklifts, conveyor belts, or automated systems for safely loading and unloading goods and products.
- Warehouse layout optimization reduces travel time and increases the efficiency of loading and unloading of goods and products.
Strategies For Maximizing Warehouse Space
- It should use vertical space to store goods and products. Vertical storage can maximize the space inside the warehouse.
- You should organize products based on demand frequency.
- Businesses can adopt the cross-docking method. Cross-docking is a logistic practice of transporting goods from inbound to outbound without the need to store them in a warehouse for a longer period. Thus, it reduces the business’s storage cost.
Role Of Technology In Warehouse Storage And Logistics
Technology plays an important role in maximizing warehouse efficiency. For example, a warehouse management system can track inventories in real time and reduce human errors in the modern warehouse. The usage of IOT and smart sensors can monitor the humidity of perishable products stored in the warehouse.
Role Of Third-party Logistics Provider In Storage And Transport
Third-party logistics companies use WMS to track goods. It stores goods in a warehouse close to targets and hence can fulfill customer orders more efficiently. They even manage product returns and do quick refunds.
A 3PL company uses multimodal transport modes, i.e., rail, road, sea, and air, for goods transport. It uses advanced software to choose the most efficient route for goods transport. The 3PL company even manages last-mile delivery services and enhances customer satisfaction.
The Future Of Storage & Logistics: Trends And Innovations
The usage of AI and automation has transformed the storage and logistics businesses in recent years. For example, autonomous vehicles and drones will be used to fulfill orders faster and enhance customer satisfaction. There will be robots for picking and packaging products, which will reduce business labor costs. AI route planning can reduce the business’s fuel costs.
More electric trucks will be adopted to minimize carbon footprints in the atmosphere, and more businesses will use eco-friendly packaging to meet customer demand.
Conclusion
Effective storage and logistics will reduce costs, enhance customer satisfaction, and improve supply chain efficiency. A business should use advanced technologies like warehouse management systems, robotics, and IoT to reduce errors and fulfill orders more efficiently. It should even implement vertical storage to maximize the warehousing space. Sustainable practices like eco-friendly packaging can help a business to achieve long-term success in the market.
AAJ Supply Chain Management
