Logistics relies on the proper functioning of activities like warehousing, inventory management, transportation, and material handling. Logistics services specialize in these functions and are essential to the overall growth of the global logistics market.
According to the IMARC Group, the global logistics sector is set to grow by a CAGR of 4.7% between 2020 and 2025. The logistics market reached revenues of $4,963 billion in 2019 and is projected to be worth about $6,537 billion by 2025.
What is a logistic service?
Logistics service is a company or provider whose services involve the designing, implementation or facilitation of an effective and efficient flow of goods, services and information along the supply chain.
Ideally, logistics services refer to logistics providers that have specialized in the coordination and management of shipments. They work with companies to provide shipping and warehousing functions.
What is logistics?
The term logistics has been in use around the world for many years, with its application in the business world related to its use in the military.
Logistics relates to how a company plans and implements a detailed and often complex operation in the management of how goods and information flow from a point of origin to a point of consumption. The basic goal of logistics is to have an effective supply chain, all operations targeted towards satisfying customer needs.
Logistics allows a company to coordinate, manage and integrate its product value chain, right from supplies sourcing to production to transportation and distribution to the final consumers.
How does logistics services work?
Logistics services is a process, often interlinking several services and components. However, the underlying principle of logistics is an understanding of a company’s production value chain.
Logistics works by integrating the principle of Just in Time (JIT) manufacturing and delivery into a company’s workflow – raw materials, information, and products.
Personnel and software systems are put in place to make sure of efficiency and cost-effectiveness at every stage of the company’s operations. As such, logistics is a key cog in ensuring the forward or backward flow within the supply chain.
Proper logistics management helps a company or business to avoid some of the logistics problems they are likely to run into from time to time. More importantly, logistics prevent inventory accumulation or wastage. One way of looking at how logistics works is by considering the 7 Rs of logistics.
A company can handle its logistics or outsource logistics services.
What is logistics management?
Logistics management involves organizing and implementing logistics steps toward specific company operations. In business, logistics management refers to how a company deals with the detailed process of handling the flow of supplies, products, and information.
Logistics management forms part of the broader supply chain management process and is key to both forward logistics and reverse logistics.
Who is a logistician?
A logistician is a person with the education and qualifications necessary for them to work in a logistics position. According to the Bureau of Labor Statistics, logisticians earn an average salary of $74,000 and $35 per hour.
What qualifications does one need to work in logistics services?
To work in logistics you need a bachelor’s or master’s degree in a relevant or related logistics field. With these qualifications, one can take up administrative positions in a logistics company, including in as a logistics manager.
You can also work in logistics if you have an associate’s degree in logistics. However, companies will likely offer entry-level jobs in inventory, warehousing, and transportation. You can advance your careers with higher qualifications or more experience.
What is the role of a logistician?
The role of a logistician in a company involves overseeing, coordinating and analyzing the company’s logistics and supply chain activities. Logisticians are tasked with the role of managing the product cycle, including things like the acquisition of supplies, transportation, allocation, inventory management, and warehousing.
Logisticians also integrate and manage the use of software programs meant to help in streamlining logistical functions.
A logistician will, therefore, be in charge of programs like supply chain management systems, enterprise resource planning software, inventory management software and warehouse management software.
Duties of a logistics manager
A logistics manager needs to have strong leadership skills and have above-average knowledge of DOT requirements.
The job description of a logistics manager involves several duties as part of their day-to-day responsibilities. The duties revolve around the planning, coordination, and supervision of an organization’s logistics operations to ensure there’s efficiency and effective resource utilization.
Logistics managers, therefore, oversee activities in components such as warehousing and inventory management.
Typically, logistics managers will be in charge of a team of individuals in the logistics department. In this responsibility, a logistics manager will formulate staff duties and oversee things like remuneration and hiring.
Other duties of a logistics manager include:
- Management of shipping operations
- Use IT for metrics and data analysis
- Manage supply chain functions, including inbound and outbound transportation
- Formulate and implement safety policies in the logistics department
Payscale’s research shows that the average salary for logistics managers in 2020 is $75,000+, including bonuses and commissions.
Elements of logistics services
The logistics system comprises several elements that together form logistics components. These elements include key fields and functionalities in supplies and materials sourcing, production planning, inventory management, and transportation.
Others include packaging and materials handling, information processing, storage and warehousing, demand forecasting, and customer service.
The elements of logistics can also cut across functions in return of goods and recycling. What happens is that different organizations will use logistics elements that best fit their operations. In general, elements of logistics fall into these five categories:
- Data and information control
Data and information control is an element of logistics key to the flow of goods and other operational procedures. Companies need to have all the necessary data and information for their inventory, transport, warehousing, and distribution.
Packaging is one of the key elements of logistics and which contributes to the 7 Rs of logistics. You want to have the right packaging to get the right quantity and delivery of goods in the right condition.
- Transport storage, warehousing, and material handling
The element of logistics that deals with material handling and storage are vital to the movement of goods. The choice of trucks and shipping modes is one of the concerns addressed with proper transport logistics. It also includes all the equipment and facilities required to aid in logistics management.
- Inventory control
Inventory control deals with managing the flow of goods, both for inbound and outbound logistics. Apart from warehouse stock, inventory control also allows for sales data analysis and using software for demand forecasting.
- Supply Support
Supply support is an element of logistics that looks at the components needed to support logistics operations. Other than transport and warehouse facilities, companies need computers, software, communications, and material handling equipment.
Types of logistics services
There are four main types of logistics: supply logistics, distribution logistics, production logistics, and reverse logistics.
- Supply logistics
Supply logistics includes the plans and processes involved in material sourcing and delivery to production locations. It includes transportation, storage, and inventory control.
- Production logistics
This involves the coordination of production operations, including product movement to storage facilities ready for transport to consumers.
- Distribution logistics
Distribution logistics also includes sales logistics and product movement from production warehouses to retailers and end consumers.
- Reverse logistics
Reverse logistics, which may also encompass the return and recycling of goods, is about the coordination logistics management process from the end-consumer. Excess, unwanted, damaged or faulty goods are removed, returned or re-absorbed into the supply chain.
The 7 R’s of logistics
The 7Rs of logistics relates to the seven things that a company must get right in the process of its logistics management.
The 7 Rs of logistics are about planning shipping strategies, implementing and then coordinating them to meet customer needs. Having a grip on the seven rights is also critical as it ensures effective supply chain management.
The seven Rs are about having the right product in the right quantity and right condition to the right customer at the right place, right time and for the right price.
- Right Product
Getting the right product in terms of standardized design and packaging can help a company’s logistics, including shipping and warehousing. It also factors in the cost of reverse logistics.
- Right Quantity
The right quantity means shipping what is needed and at costs expected. The principle of demand and supply should be in play here, which calls for proper inventory management.
- Right Condition
Every product must meet standards and specifications and be delivered to the customer as required. Logistics needs to ensure there are no damages before or during shipping.
- Right Customer
A logistics solution should always have the right customer in mind. Companies need to research and understand their target customers, ensuring the right customers are reached.
- Right Time
Logistics service providers must plan and execute their processes to ensure the timely delivery of products to customers.
- Right Place
Businesses need logistics solutions that help them deliver their products to the right customer at the right place. It is important as consumer demand can greatly vary from region to region.
- Right Price
It is important to price products and services rightly as part of logistics management strategies. Right prices are also crucial for a company looking to track its financial growth. Product value and price must correlate.
Major problems and challenges in logistics
Logistics firms around the globe face several challenges and problems. Most of these problems are down to massive growth within the global trade industry. Nonetheless, various firms face different problems. Here are five problems of logistics.
- Ineffective coordination
Lack of proper coordination and fragmentation within the logistics industry poses one of the biggest problems. There are so many parties involved that coordination of operations becomes a challenge.
- Errors in warehouse and inventory management
Companies have run into huge losses for errors in their warehouse and inventory management. With so much stock to deal with, it’s possible to misplace products, pack wrong items or wrong labeling and so on.
Infrastructure is currently a major problem for logistics firms, with a lack of facilities at ports or warehousing shortage big challenges. Congestion, lack of capacity and delays also arise from lack of adequate infrastructure. Shortage of drivers is another capacity related problem that impacts transportation
Security is a problem, with goods lost due to a lack of due diligence from the various parties handling shipments.Other than above, lack of talent, pricing pressures, and difficulty in forecasting due to global economic changes can be also considered as a general problem
- Regulation problems
Logistics providers have to deal with various regulators and face many compliance problems, including at international customs.
How to solve logistic problems
Solutions to logistics problems today involve the adoption of new technologies to digitize and automate workflow. There is also a need to improve inventory management and overall logistics strategies. These are some of the many strategies companies are using to solve logistics problems.
- Use of software apps to optimize and synchronize operations
- Optimize storage using robots
- Use of AI and autonomous tracking of shipments
- Use container and trailer storage to augment available space
Of course, if you want a trucking company to handle all this for you, call B&B Logistics at 1-877-512-0692.