Logistics operations and how to improve them

Logistics operations are the backbone of many businesses — a driving force that directly impacts customer satisfaction and long-term growth. From warehousing and inventory management to transportation and distribution, these activities make sure the right products reach the right place at the right time.

In this post, we’ll delve into logistics operations, their essential functions within the value chain, and the strategies and tools companies can use to fine-tune their supply chains. The goal? Greater efficiency, lower costs, and happier customers.

What are logistics operations?

Logistics operations are the set of processes that keep materials, information, and products moving throughout the supply chain. They cover sourcing raw materials to delivering finished goods to end customers, including activities such as transportation, warehousing, and order fulfillment. When managed well, these processes enhance inventory control, increase order accuracy, and ensure on-time deliveries — whether through in-house improvements or by partnering with third-party logistics providers (3PLs).

One major objective of all logistics operations is First Time Right: delivering goods correctly on the first attempt. This supply chain KPI plays a pivotal role in meeting customer expectations and boosting a company’s profitability.

Functions of logistics operations

Effective logistics operations revolve around planning, controlling, and managing inventory. They should be designed to meet organizational objectives, taking into account the following:

• Securing supplies. Logistics must align closely with production and work schedules. It’s advisable to create a procurement timeline to guarantee stock availability while also addressing storage, handling, loading, and transportation.
• Supporting production. Once raw materials arrive at the plant or distribution center (DC), they must be appropriately stored and moved within the facility. As manufacturing begins, operations also need to manage semi-finished and in-process goods.
• Driving sales. Lastly, logistics operations must anticipate product demand to provide excellent customer service. This includes order processing, shipping, and accurate and timely delivery.

A warehouse management system (WMS) is an optimal tool for maintaining uninterrupted production. This software facilitates the continuous supply of materials to production lines. Easy WMS from Interlake Mecalux, for instance, coordinates warehousing operations such as order fulfillment and storage location oversight. Integrating this software with the WMS for Manufacturing module gives companies comprehensive control over raw materials and manufacturing workflows.

Types of logistics operations

Not all logistics operations are the same. They’re classified by their nature, direction, and even whether ownership of the goods changes hands:

By content

• Material flow operations. These cover all tasks related to the physical movement of goods: warehousing, transportation, packaging, loading, unloading, and freight consolidation, among others.
• Information flow operations. These involve collecting, storing, processing, and transmitting the data needed to meet production requirements and customer expectations. Real-time visibility is vital here, enabling product traceability and helping companies stay ahead of shifts in demand.

By value

• Value-added operations. These processes enhance or transform the product in some way. Packaging is one example where customizing products and personalizing orders boost customer satisfaction. Tools like Interlake Mecalux’s Value-Added Services (VAS) streamline these tasks, making them faster and error-free.
• Non-value-added operations. These necessary logistics processes, e.g., storage and transportation, don’t change the product itself.

By direction

• Forward logistics operations. Goods and information flow directly from the company to the end customer.
• Reverse logistics operations. Reverse logistics comes into play when customers return products or file claims with the business.

By transfer of ownership

• Unilateral operations. These involve the movement of goods without a change in ownership.
• Bilateral operations. In these cases, as the goods move physically, ownership and insurance responsibilities transfer from one entity to another.

Key processes in logistics operations

To keep the supply chain running smoothly, several processes need to work in harmony:

1. Forecasting. Companies analyze and anticipate demand to plan production, inventory, and distribution effectively. This demand forecasting stage is critical to avoiding shortages or overstocks.
2. Procurement. Efficient sourcing of raw materials or semi-finished goods reduces waste and increases profitability.
3. Transportation. Planning, executing, and supervising the movement of goods into company facilities is a cornerstone of logistics operations.
4. Warehousing and inventory. Sound management of these processes ensures products are stored properly and ready for production or final delivery, giving businesses a competitive edge.
5. Fulfillment and distribution. Ultimately, logistics operations aim to complete orders accurately and deliver them successfully.

How to optimize logistics operations

Warehousing experts can help you upgrade your business’s logistics operations by focusing on several areas:

Efficient warehouse management

Many companies rely on WMS software to maintain accurate inventory levels. Solutions like Easy WMS automate much of the tracking of inbound and outbound goods. They also guarantee product lists match physical quantities, plan inventory turnover, and reduce unnecessary accumulation of products.

Automated storage solutions

Automated storage and retrieval systems (AS/RSs) streamline order fulfillment and shipping processes. AS/RS solutions for pallets (like the 3D Automated Pallet Shuttle) and for boxes (the Shuttle System) — along with autonomous mobile robots, picking robots, and high-performance pick stations — all enable a faster, more expedient product flow through DCs. They also make better use of space.

Real-time inventory systems

With logistics operations becoming increasingly complex, more companies are adopting software that facilitates real-time inventory management. The growth of multi-channel sales and the vast variety of SKUs in warehouses make this visibility a strategic necessity.

Logistics operations: The heart of the supply chain

Logistics operations form a complex, interconnected system that, when executed well, ensures products arrive at the right place, at the right time, and at the lowest possible cost. Effective management has a direct impact on customer satisfaction — and therefore on a company’s bottom line. In today’s fast-changing global market, top-notch logistics operations are no longer optional; they’re a strategic imperative.