If you are a farmer, for instance, and your products are oranges to be delivered or shipped to farmer's markets, grocery stores or even food processing plants, you need to keep the oranges in your farm free from bugs and pesticides and make sure that they grow into healthy fruit.
Once the oranges are picked, they are then put into crates, stored and eventually delivered to their final destination. This process has to be done within a few days to keep the oranges fresh.
This is your logistics supply chain. If any part of your supply chain has an issue or is broken, it may affect your entire shipment of oranges. For instance, if the truck that delivers your oranges breaks down with no replacement immediately available, your oranges are at risk of spoilage. The entire shipment may not make it to its destination, so it will need to be replaced quickly, which entails paying the replacement costs.
Everything in logistics affects your bottom line. This includes shipping fees, fuel costs, spoilage, storage and anything else that is involved in delivering the product to your customer. If you can reduce product spoilage and decrease logistics costs, you can save a significant amount of money and increase your profit margins.
Excellent customer experience not only satisfies your customers but also increases your revenue. The best marketing strategy, after all, is word-of-mouth. Your happy customers will tell their friends, family, colleagues and contacts, who will, in turn, consider buying from you.
Your customers don't care how you make your product or what issues there are in getting it in their hands. They only care about receiving their product as quickly as possible and in good condition. This can be a challenge for online sellers. When your logistics fails to prepare orders quickly for fulfillment, delivery or shipment, then the customer is left waiting.
This forces them to find another online store. You can help improve your customer experience by automating some functions, such as inventory control. Automating inventory control allows you to determine which items are in stock and which are running low. It's also important to regularly update customers and give them feedback to let them know that their orders are not neglected or ignored.
You may also send tracking numbers to encourage customers to track their orders. For orders that naturally take a longer time to deliver because they need to be customized or transported from overseas, you should communicate with customers from the start. You should also let them know how long their order will take. Being upfront when it comes to delivery and logistics keeps customers satisfied and engaged.
Logistics may include some or all of the following business functions:. Inbound transportation refers to the movement of goods and materials from the supplier to your company. It involves various activities such as the shipment, storage and distribution of parts or raw materials that are going to be used in production. It may also include tracking inventory, sourcing the materials and optimizing the movement of goods from the supplier to your warehouse, store or manufacturing plant.
Outbound transportation refers to the flow of finished products from your company to your customers or end-users. These activities are mostly related to customer service and distribution channels. For instance, if your company's sales department receives an order from a customer, they will check the inventory to make sure the product is in stock and then send the order to your warehouse for packaging and delivery to the customer. Warehousing refers to the safe storage of goods, inventory or information within a specified area or building.
It is a requirement for most companies that manufacture, export, import or transport goods. Warehouses securely and safely store products in an organized way to monitor where items are located, how long they have been there, when they arrived and the quantity available. In e-commerce, goods are stored until an order is placed through the company's website, at which point the product is shipped directly to the customer from the warehouse in which it was stored.
In traditional retail, the items may be temporarily stored in a warehouse before they are delivered to a physical store. Fleet management refers to the management of commercial and private motor vehicles, aviation machinery, ships and rail cars. Key Takeaways Logistics is the overall process of managing how resources are acquired, stored, and transported to their final destination.
Poor logistics in a business can impact its bottom line. Logistics is now used widely in the business sector, particularly by companies in the manufacturing sectors, to refer to how resources are handled and moved along the supply chain.
Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Terms How Supply Chains Work A supply chain is a network of entities and people that work directly and indirectly to move a good or service from production to the final consumer.
Supply Chain Management SCM Supply chain management SCM is the management of the flow of goods and services as well as overseeing the processes of converting original materials into final products. How Operations Management OM Works Operations management OM is the administration of business practices to create the highest level of efficiency possible within an organization.
Supply Management: An Overview Supply management is the act of identifying, acquiring and managing the resources and suppliers that are essential to the operations of an organization. What Is Vertical Integration? Vertical integration is a business strategy to take ownership of two or more key stages of its operations to cut costs. Partner Links.
Related Articles. Business Essentials Value Chain vs. Supply Chain: What's the Difference? Business Essentials Direct vs. Indirect Distribution Channel: What's the Difference? Business Essentials UPS vs. FedEx: What's the Difference? Investopedia is part of the Dotdash publishing family.
To catch the attention of employers you'll need to show some experience of logistics and supply chains, either through previous or part-time work in the retail sector, industrial placements on your course, or through internships and work experience. Demonstrating strong commercial awareness and knowledge of the company will also stand you in good stead. Enthusiasm and attention to detail will also set you apart from the competition.
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On this page Why choose logistics and supply chain management? Do I need a logistics degree? What skills do I need? What careers are on offer? Can I do a logistics graduate scheme? View all transport and logistics jobs. While not the career that springs to mind when thinking of retail, logistics and supply chain graduates are in demand in a sector that relies on delivering goods to customers in a timely manner Why choose logistics and supply chain management?
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