Activities

Top 6 Benefits of Logistics Activities in an Organization

Logistics management is another name for logistics. For the actual distribution of goods, various businesses engage in logistics activities. Many other industries, including FMCG, consumer durables, and many others, regularly produce goods. These items need to be shipped to distributors, dealers, and finally the end user. The process of getting goods from a company to an intermediary or final customer is known as logistics.

However, logistics is not limited to “transportation.” Companies use a variety of logistics activities or logistics functions.

Example: Since the products will be shipped, you will need to adjust your warehouse inventory if you need to ship them to a distributor. In a similar vein, we require an entry indicating that the product left the warehouse and reached the distributor. In the meantime, you must ensure that the goods are handled appropriately and delivered to the dealer in the desired state. Dealer returns ought to be considered as well.

You can see that there are a lot of logistics-related tasks that need to be done in the example above. Six of these logistics functions are discussed in this article.

Top 6 Benefits of Logistics Activities in an Organization:

Activities or responsibilities in logistics:

1. Processing orders:

The commercial department of an organization oversees order processing, which sets the stage for all logistics activities. The department that internally processes orders and ensures that payment and delivery deadlines are met is the commercial department.

The sales team fulfills customer orders and stores them in the warehouse. When a customer makes a payment, the sales team enters the system that the store needs to deliver ten units and that the customer has ordered ten units.

With trade receipts, many businesses also deduct warehouse inventory. Therefore, to prevent double orders, if the sales team approves a purchase order for ten units, those ten units will automatically be deducted from the available inventory. An error in this step—such as entering the wrong quantity or delivery address—can have an important impact on the logistics process, making it an essential component of any logistics activity.

2. Handling of materials:

The movement of goods within the warehouse is known as material handling. The warehouse can efficiently process orders if the materials are processed. Although it may appear to be a routine activity, it is essential and ongoing in any warehouse.

It is very simple to move a product from one location to another in a small store with 100 products. However, every time he takes an order, the proprietor of this tiny shop must look for the products and the order if he does not know where the products are kept. He must look for this among his 100 possessions. After that, we need to move the other products so that the customer can get the requested product.

Add 100 to this scenario. The size of corporate department stores can be more than half a mile. Consider how much material is kept in your warehouse. Managers of warehouses are in serious trouble and have an important impact on productivity and efficiency if they do not know where materials are stored and how to transport them to the warehouse distribution center. Therefore, logistics relies heavily on material handling.

An important part of logistics management is organizing materials in a warehouse in a way that makes it easier to move and ship them. As the warehouse gets bigger, this becomes more important. For material handling, for instance, Amazon employs a combination of humans, robotics, and artificial intelligence. Amazon ships package worth Rs 160,000 per day, according to estimates. 70,000 packages per hour are the equivalent of this. If Amazon didn’t use the best materials handling methods and equipment, just picture the chaos.

3. Storage:

Take, for instance, consumer electronics manufacturers Samsung and LG, which operate in a variety of nations. It can be produced in a single location, but it is distributed worldwide.

The warehouse’s primary advantage is its proximity to the dealer or distributor, which makes it easier to deliver the goods. If a product is branded but takes a week to arrive, it may not sell as well in the market as a product that is not branded but arrives in two days.

Therefore, it makes sense for well-known businesses to have closer warehouses to expedite product delivery. The first step for the brand to take after it has established itself in a new region is to lease a new warehouse. Brands are brought closer to their target market and territory as a result.

Additionally, the location of the warehouse alleviates stress on the main warehouse, which is the vast facility where most products are stored. These warehouses become interdependent to withstand delivery pressure and consistently deliver goods to customers when demand rises or production decreases.

4. Management of the inventory – Logistics Activities:

If a company has 100 units of a product in stock but only 10 are in demand, the investment in 90 units has been wasted. This is money that banks charge interest on and can be used as working capital.

In the meantime, even though there was a demand for 500 units, another business only produced 200 because it was concerned about the low demand. A perfect business produces 100 units, anticipates a 50-unit demand, and is prepared for a double demand. But they keep an eye on the demand all the time and are ready to meet it without spending a lot of money on manufacturing.

We now understand the importance of inventory management in logistics operations from the preceding illustration. One of logistics’ most important tasks is inventory management. especially after implementing just-in-time manufacturing, lean manufacturing, and other manufacturing processes that lower the cost of inventory management.

5. Transportation – Logistics Activities:

We have arrived at one of the most important logistics activities, one of the most resource- and profit-rich logistics subsectors. There is a reason why transportation costs so much. Fuel, whether it’s gasoline, diesel, or gas, is expensive and primarily used for transportation. To control transportation costs, businesses spend hundreds of thousands of dollars.

The physical delivery of goods from the company to distributors or dealers and from dealers to final customers is part of transportation. Typically, businesses are only involved with distributors or dealers until timely delivery. The shipping to the final customer is then the responsibility of the distributor. Shipping, on the other hand, reduces the dealer’s profit and comes at a cost. Therefore, the business must provide distributors with more profit to cover its expenses.

The lower the quality of the company’s inventory and storage management, the lower its transportation costs. When it comes to transportation profitability, economies of scale are crucial. We have adopted the “Breaking the Bulk” strategy for everyday consumer goods to lower transportation costs and enhance the logistics function.

6. Packing – Logistics Activities:

Packages come in one of two varieties. One is a package that attracts customers and is displayed on a shelf in a supermarket or hypermarket so that they can buy it. The other is shipping packaging, in which products are packed together to prevent damage or spills and allow for the safe transportation of large quantities.

The logistics team is responsible for product packaging. Otherwise, the product will cause harm to the end user, incurring an important expense for the business. Because of this, a lot of money is spent on product packaging, especially for the export market. Although packaging only accounts for 1 to 2 percent of the item’s cost, the item will be lost or damaged at full cost if it is incorrectly shipped.

The activities and functions of logistics that large businesses must deal with include all the aforementioned. There are two perspectives on logistics from management.

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