Drive efficiency improvements through holistic logistics optimization.
Drive efficiency improvements through holistic logistics optimization.
Did you know that four in 10 people expect products to be delivered within two hours? In today's fast-paced business world, meeting such consumer expectations is gradually becoming the norm. But how are e-commerce giants and industry leaders staying ahead of the competitive curve?
For manufacturers and retailers, the real game-changer lies in understanding how well your logistics supply chain management is performing. There's more to logistics than moving packages from one point to another.
Making the right changes in your logistics chain can lead to significant efficiency improvements. Leading global brands are increasingly leveraging logistics supply chain management to gain a competitive edge.
Key functions of Logistics
Supply chain management encompasses everything from raw material sourcing to after-market customer service. However, the logistics function has an identity of its own. To understand its impact, you must differentiate it from other supply chain elements.
Before we understand how logistics drives a business, let's go over the key functions of logistics supply chain management.
Transportation management
Logistics supply chain management is responsible for the transportation of goods and services from one place to another. Transportation management is a vital part of logistics, whether it's the last-mile delivery or moving components from one production line to another. Logistics also covers product returns.
Transportation management extends to intricacies such as managing commercial terms, logistics route mapping, and rate negotiations. In simple terms, logistics acts as the wheels of your business.
Warehousing
Logistics supply chain management encompasses warehousing, which is responsible for the storage of products. Warehouse management is a key logistics optimization strategy that enables your business to be ready to deliver at all times. Warehousing involves protection and seamless distribution of products. Invoices and insurance documentation are also handled at warehousing points.
Inventory management
Possession of the right amount of inventory at the right time is an important part of logistics supply chain management. Inventory management covers the process of managing inventories such as raw materials, components, and finished products.
Inventory management lays the foundation for a strong retail business. It is the key building block in the success of supply chain management. Businesses need to ensure optimum levels of stock at all times to reduce the instances of stockouts and overstocking. Inventory management plays a crucial role in ensuring your business has the stocks to support the surge in demand.
Impact of logistics on business performance
Logistics supply chain management influences every aspect of operational and strategic excellence. It ensures that every part of your business moves in harmony—whether it's the delivery of products, stocking inventory, or managing returns with ease.
Here are the three ways in which effective logistics supply chain management is creating ripples in business performance:
Cost efficiency
Businesses can save on costs by optimizing their processes. Logistics operations play a vital role in driving cost efficiency by:
- Optimizing transportation: Well-planned transportation routes reduce fuel and labor costs. Regularly reviewing logistics agreements allows for rate renegotiation, while initiatives such as load consolidation help decrease the number of trips. AI-powered freight auditing is another way to save transportation costs.
- Streamlining warehousing: Efficient warehouse management minimizes storage costs, optimizes space utilization, and reduces unnecessary handling. Automation and technology can further streamline operations, decrease labor costs, and minimize errors.
- Maintaining healthy inventory: Conducting regular audits helps prevent capital from being tied up in excess inventory. This enables companies to decrease carrying costs and improve cash flow.
Time-to-market
Quick delivery of quality products helps businesses gain a unique advantage in the marketplace. Streamlined operations and sourcing are integral in reducing the overall time-to-market.
Here are two ways in which logistics operations transform how businesses deliver products:
- Specialization in delivery: Logistics helps maximize speed and efficiency improvements through specialized delivery routes and shipping methods. Adoption of real-time tracking of shipments and vehicles enables businesses to ensure that products reach customers promptly, thus reducing the time-to-market.
- Strategic warehousing: When combined with business intelligence, logistics helps determine the areas close to the target market. This strategic move accelerates the supply chain and assists businesses in responding faster to customer orders and market shifts.
Customer satisfaction
In the current business landscape, logistics operations have become the driving force behind converting same-day deliveries and ship-to-line supplies into raving customer reviews.
Here's how logistics supply chain management drives customer satisfaction:
- On-time delivery: Guaranteeing timely delivery helps businesses build trust and reliability among customers. Regular improvements in delivery strategies can be a key differentiating factor for businesses and help them gain customer loyalty.
- Quick and transparent returns: Well-organized reverse logistics ensures a hassle-free customer experience. Additionally, clear return policies allow customers to make purchases with confidence.
- Reliability in inventory: Businesses can strengthen customer trust by ensuring optimal stock of their favorite products. This can often lead to repeat orders.
Sustainability
Reducing your business's carbon footprint is shifting from being a competitive differentiator to a basic requirement. Paperless communication and renewable energy sourcing are increasingly becoming the norm.
Sustainability issues such as Scope 3 carbon emissions have become a key part of regulatory discussions and brand image. Businesses often rely on logistics to bring about change. Here's how:
- Intelligence in delivery planning: AI experts such as Pando offer freight procurement and TMS solutions that optimize routes and fuel consumption. This plays a major role in reducing carbon emissions. Another way to reduce greenhouse gas emissions is to introduce electric vehicles.
- Fully digital invoice management: Logistics involves significant commercial paperwork, which creates immense opportunities for digitization and efficiency gains. Through paperless communication, including e-invoices and emails, businesses can streamline processes, reduce costs, and minimize their environmental impact.
- Sustainable warehousing: Practices such as 100% solar-powered lighting panels and AI-driven space utilization are warehousing aspects that instantly minimize energy consumption and reduce wastage. Consolidated vehicle loading from warehouse docks helps reduce overall trip count and drive sustainability.
With the astounding impact of logistics in mind, let's learn about cases where logistics supply chain management has delivered a competitive advantage.
Examples of competitive advantage through efficient logistics supply chain management
Businesses that excel in logistics don't just optimize processes—they innovate to stay ahead of the competition.
Accuride: Navigating crises with AI-powered visibility
AI-powered transportation management uses algorithms and analytics for live insights and complete supply chain control. It helps businesses foresee risks, adapt quickly, and avoid costly disruptions. It even facilitates instant, informed decisions and pinpoints shipment statuses.
A prime example of this is how U.S. automotive parts manufacturer Accuride embraced Pando's supply chain solution. Now, Accuride has moved from near-zero shipment visibility to instantaneous insights and tracking. During the March 2024 Baltimore bridge collapse, Accuride used Pando's insights to identify at-risk shipments and reroute them—all within hours of the alert.
This AI-powered integration has reduced their freight costs by over 6.5%. Accuride has boosted customer satisfaction since account managers have live, data-driven shipment insights.
UPS: Predictive logistics with machine learning
Predictive logistics is a supply chain integration that leverages machine learning (ML) algorithms to forecast demand, optimize routes, and improve delivery efficiency. This can lead to significant cost savings, reduced delivery times, and enhanced customer satisfaction.
UPS, a global leader in delivery services, is an excellent example of this. Its ORION system uses ML to optimize delivery routes for millions of packages in real-time. Thus, the company has saved over 100 million miles and 10 million gallons of fuel annually.
UPS also offers the My Choice program, which allows customers to choose their delivery schedule and track shipments.
Patagonia: Customer loyalty through reverse logistics
A robust reverse logistics program leads to seamless customer experiences. It also reduces waste, extends product lifecycles, and fosters customer loyalty. It also boosts brand perception and customer lifetime value.
US fashion brand Patagonia has become the gold standard of reverse logistics with its "Worn Wear" program. This program allows customers to return and repair Patagonia wear, no matter how old, at no charge. It also has a certified pre-owned gear shop to resell these returned products.
With this program, Patagonia strengthened brand loyalty and encouraged repeat purchases. The company is now a leader in responsible retail. The brand also partners with entrepreneurs who "upcycle" old garments into new products, blending profit with sustainability.
Achieving supply chain excellence with Pando.ai
Logistics supply chain management is a transformative force in every business, driving everything, from cost efficiency to customer satisfaction.
Businesses can achieve operational excellence by adopting Pando's cutting-edge technologies such as AI-powered transportation systems and automated freight procurement. Pando also ensures your business has a unified platform for a resilient, agile, and efficient supply chain.
Connect with Pando if you think your logistics supply chain management needs optimization. Book a demo today.
