The global supply chain logistics industry has experienced remarkable growth over the years. The Indian logistics market is expected to become USD 6.43 billion by 2030. It is rising mainly because of increased e-commerce companies, technological advancements, and trade expansion to foreign countries.
Supply chain logistics involves several processes, such as sourcing, manufacturing, and more. Proper communication with all stakeholders is essential for smooth product delivery.
Understanding Supply Chain Logistics
Supply chain logistics is the backbone of any business. It involves a complex network of procurement, manufacturing, warehousing, transportation, and customer delivery.
Today, businesses face the tough pressure of faster-ordered product delivery to customers in a cost-effective manner. However, this can only be possible if all the supply chain logistics processes work smoothly and transparently.
Let’s discuss some examples of supply chain logistics.
1. Amazon
Amazon has evolved its e-commerce logistics today. It has fulfillment centers in various locations in India. The company focuses mainly on speed and efficiency in delivering products. It uses robots to optimize different operations inside the warehouse.
2. Coca Cola
Coca Cola has an innovative and efficient supply chain operation. It produces most of its drinks in the same country and thus reduces logistics costs. Coca Cola customizes its product package and taste according to the customer segment and enhances customer satisfaction.
3. Zara
Zara is a popular fashion brand which keeps on updating its inventory. It designs a new product and sells it in its store within one or two weeks. So, customers will always find fresh stock in Zara stores. The supply chain of the Zara brand reduces wastage and meets customer demand quickly.
2. Toyota
Toyota, an automobile Company, is most popular for its just-in-time inventory management techniques. JIT inventory means they orders inventories only when required during the production stage. The company collaborates closely with suppliers, ensuring they provide timely products.
All these examples prove that effective supply chain and logistics can drive profitability, reduce cost and enhance customer satisfaction.
Difference Between Supply Chain And Logistics
The supply chain involves a broader concept and includes activities from procurement to customer delivery. It provides procurement, warehousing, production, logistics, and customer delivery.
Logistics is a part of supply chain management. It includes efficiently storing and transporting goods from one place to another. Effective logistics management ensures that the right products will cost-effectively arrive at the right time.
Key Elements Of Supply Chain Logistics
Supply chain logistics management consists of various elements that efficiently move goods from suppliers to customers.
1. Planning
Planning is the foundation of supply chain management. It involves analyzing market data and customer demand and finding resources to meet the demand.
2. Sourcing
Smooth & reliable supply chain heavily depends on reliable suppliers. It includes working with different vendors so that they can provide raw materials on time.
Businesses need to follow a strict policy that raw materials should meet the specifications of manufacturing requirements. Also, they should ensure that the vendor has a good track record of delivering high-quality materials or goods on time and in a cost-effective manner.
3. Manufacturing
In the manufacturing process, businesses have to convert the raw materials into finished goods. It also includes processes like testing, inspection, and assembly.
The business needs to be very mindful during the manufacturing process. It should be aware of wastage and other factors that will not differ from the plan. For Example, if the manufacturing process uses more raw materials than required, businesses should fix the issue as soon as possible.
4. Warehousing
The warehousing process involves the storage of the finished goods in the warehouse. They have to make sure of safe storage.
The warehouse storage staff inspects the finished goods when they are received and keeps them in designated places. When a customer orders any product, it is picked up from the shelf. The staff thoroughly packages the product so that it will not get damaged during transportation.
5. Logistics
Logistics involves delivering the finished goods to the end-user or directly to the customer. It is the most important and cost and time-consuming process.
The main aim of this process is to deliver goods cost-effectively, on time and in good condition. Businesses can choose different transportation modes like air, rail, road, or sea. Also, they can use advanced software like a transport management system to select the most efficient route based on cost and distance travelled. These practices can save businesses lots of money.
4. Return
Sometimes, the customer does not like the product. In this situation customers can raise a return request on the same platform.
The returns process is the most crucial process of supply chain logistics. The product is collected and inspected thoroughly. It is either restocked or discarded based on product condition.
Different Types of Logistics Supply Chain Models
1. Continuous Flow Model
The continuous Flow Model is best suited for a business that produces constant goods and materials and expects a stable demand in the market. However, it is less flexible when there are sudden changes in market demand or disruptions in the supply chain.
2. Agile Model
Agile model is suited for businesses which can quickly respond to the sudden market changes. It requires effective communication with raw material suppliers. Businesses also need to invest in technology to smooth the run of the agile model.
3. Fast Chain Model
Fast chain model is suitable for businesses whose products have short life cycles. Let’s discuss with an example: A fashion designer creates a new collection for a particular festive season. She needs to sell the products before the festive season ends because customers do not buy the products after the festive season. If the fashion designer takes a longer time to sell products, then customers will not take an interest in buying them.
4. Efficient Model
The efficient supply chain model is well suited for a large manufacturing company that produces a high volume of goods at a low cost. The business minimizes waste and reduces costs by streamlining various supply chain operations.
Efficient chain model has certain limitations like it becomes hard for the company to sustain when the market demand changes suddenly.
5. Custom Configured
It is tailored to meet specific customer requirements. Businesses with unique products or services requiring high customization should adopt this model. The brand will introduce a distinguished product in the market and increase customer satisfaction. However, customization can increase the costs of a business.
Importance Of Supply Chain Logistics
1. Reduces Cost
Supply chain managers mainly focus on reducing the cost of the businesses in numerous ways. It includes collaboration with suppliers, proper communication with all the stakeholders, investing in technology and proper inventory management. Following all these steps helps businesses to reduce their overall operations costs.
2. Better Customer Service
An effective supply chain logistics ensures that the right quantity of products is delivered to the customer’s doorstep within time. An interconnected network of both suppliers and distributors can enhance customer satisfaction and increase brand value in the market.
3. Reduces Risks
Supply chain and logistics management can reduce risks related to transportation, delays, or sudden changes in market demand.
Common Challenges in logistics and supply chain management
1. Supply Chain Disruptions
Supply chain disruptions can occur because of pandemics, inflation, war between two countries, manufacturing defects and many more. It can increase cost and cause delays in order fulfillment.
A business can collaborate effectively with suppliers and invest in technology to manage supply chain disruption risks.
2. Increased Transportation Costs
There are several factors that control transportation costs. The rise in fuel costs and taking the long delivery root can increase the transportation costs of the business. Businesses should make one-time investments in technology that helps them manage long-term costs. For Example, implementing TMS can help businesses find out the efficient and short route for delivery and also provide live tracking of the shipment.
3. Inventory Management Issues
Improper inventory management can lead to issues like overstocking problems. It can increase the warehousing costs of a business. Simultaneously, time-sensitive products can become outdated with time.
Today, most businesses focus on improving inventory accuracy, and it is possible to implement an effective and good inventory management strategy.
4. Lack Of Visibility And Communication
Lack of visibility and poor communication between the stakeholders like suppliers, manufacturers and distributors can cause delays in the manufacturing process as well as in order fulfillment.
Conclusion
Supply chain management logistics plays a vital role in a business. Proper management of the supply chain can reduce costs and drive profitability. Challenges like increased transportation costs, improper communication, or natural pandemics may exist. In such cases, businesses should invest in modern technology to mitigate the risks. It can even switch to eco-friendly packaging and electric vehicles to reduce carbon emissions and fuel costs.
AAJ Supply Chain Management
