Supply chain transportation is one of the most essential practices for businesses that ship goods and cargo. It is also the best practice for our company, which wants to optimize its work and manage the flow of information. Logistics and supply chain management are essential parts of one crucial mission. You read it right: logistics is not the same as supply chain management. We will try to understand automotive logistics and many other things in this article.
Supply chain transportation and logistics management
Many people confuse these two terms, although this is fundamentally wrong. So, supply chain management is complex work, from the delivery of goods and their storage to working with customers, contractors, and manufacturers. That is, it is one prominent well-coordinated structure that constantly moves goods. What does logistics do? Delivers goods from point A to point B. That is, logistics is only part of the supply chain. Simply put, the supply chain is one big core, and logistics is part of this core.
What does supply chain management consist of?
There are three main components on which all this activity rests. These are purchasing, manufacturing, and moving. And already inside these components, there are other equally important components. Such as materials, production volume, cargo storage, and logistics.
Logistics within Supply Chain Management
Let’s think together about how logistics helps transportation supply chain management. After all, logistics is an integral part of this large structure, thanks to which manufacturers have materials for the manufacture of goods that we order from intermediaries. So, what functions can be distinguished:
- Warehouse management
Cargo and goods need to be stored somewhere and sometimes it’s not just an intermediate point for a few days. Sometimes the cargo is in warehouses for months and years, so it is important to efficiently manage this room and all the processes inside it.
- Cargo packing
A lot depends on the packaging because it protects the goods from damage. If we are talking about chemicals, perishable products, etc., then they need special storage and packaging conditions so that the goods do not fall into disrepair.
- Cargo transportation
You need to negotiate with the transport company, set the day of shipment and arrival of the cargo, monitor the loading of the goods, calculate the cost of delivery, and then monitor the movement.
- Working with Customs
If we are talking about international delivery, then this process is complicated by a large amount of documentation, certification, and waiting time. If at least one detail is overlooked, the cargo will return back.
- Reverse logistics
Things don’t always go smoothly. The product may deteriorate, become unusable or break during operation. To do this, it is returned back along the entire supply chain, changed or disposed of.
What is the role of transportation in a supply chain
It would seem that the role of transportation in the supply chain is obvious – to deliver goods. But believe us, the impact of logistics is much broader and deeper than it seems at first glance.
For example, take the level of customer satisfaction. If the logistics tools were used correctly, then the packaging and the goods would be in proper condition, and the goods will arrive quickly and without delay. And this will please the client and he will turn to your production again and again.
Logistics also provides an uninterrupted system of operation of the entire system. The more established the process of processing documents, and communication between performers, the better the delivery chain system works. Also, with the help of adequately configured logistics, you can reduce costs and the cost of a product or service. This means that you can earn more and spend this money on the development of new directions.
Role of Transportation in logistics and supply chain management
- Minimizing costs
The more efficiently the logistics operation is carried out, the less it costs for the business. Because companies plan routes, reduce downtime, and all this will speed up the process and not allow money to fly into the air. Logistics helps to reduce the working hours of employees to perform one task and reduces unnecessary links in the supply chain. All this minimizes costs.
- Combining cargo into one
Logistics is looking for new solutions, and one of the effective practices is the consolidation of traffic volumes. After all, why transport a half-empty truck several times if you can complete everything in one trip in one big batch? Logistics makes it real.
- Increasing customer satisfaction
Many customers are already used to fast delivery in one. As well as, many customers are willing to wait a little longer but get delivery for free. Therefore, logistics explores the desires and preferences of customers in order to arrange a delivery that they will be satisfied with.
- Risk minimization
Logistics reduces the likelihood of situations when the cargo has deteriorated, got lost or did not reach. Therefore, it is so important to optimize both the road to the warehouse and the warehouse storage in order to minimize these risks and leave customers satisfied. It is also important to plan the company’s resources so that it always has enough raw materials and resources to meet customer demand. This is also done by logistics, which plans the supply of goods and raw materials.
- Fewer intermediaries
The more intermediaries there are, the higher the risk that someone will make a mistake at a particular stage. Therefore, many companies are trying to create an autonomous supply chain and logistics in which they will not need the help of third parties.
As we have already said, if the goods have to pass through customs, then the documents are the biggest and most important problem. This is also true for some types of cargo that are subject to serious control. For example, medicines, military developments, secret cargo, government orders, etc.