The process of managing stock, warehouse inventory, and freight transportation is at the heart of logistics. Logistics is the management and coordination of moving inventory from it’s origination to its ultimate destination. The goal of a logistics team is to find a way to do this process in the most streamlined, cost efficient method possible.
When a product is ready for use, the clock starts to count down how long it will take to complete the cycle from completing the manufacturing of a product to the consumption of that product. The longer it takes to get the item into the hands of the consumer, the more money a company loses. So how does one streamline this process? By implementing a logistics plan of action, a company can do just that. Larger manufacturers will hire a logistics team that is responsible for the routing of goods from the company, to the freight transportation company, and finally to the end client. They will have a database system to track all inventory. They will monitor inventory levels to make sure that a backlog of supply occurs. The cost associated with storing inventory in a warehouse is often much greater than the expense of shipping products. For this reason, it is very important to carefully control how much stock is stored.
Another responsibility of logistics is to find the most cost-effective means of transportation. Obtaining freight rate quotes and striving to keep these rates as low as possible is a key factor to a successful logistics operation. When the trucking industry was deregulated, it sparked a new wave of competition and lower costs. This combined with improved technology to track and communicate shipments; freight transportation management became a little easier. Being able to follow and trace the cargo more efficiently has reduced the communication errors from supply chain to the wholesalers and retailers.
An additional responsibility of transportation and logistic specialist is to account for accurate transportation times. It is vital for companies to be able to rely and trust that their shipments will arrive in a timely manner. Being well organized accounts for much of this success, but the ability to transport the shipments quickly is also important. Because the country’s infrastructure has improved with better maintained highways and interstates, transportation times have decreased. Freight transportation is more reliable now because companies can more accurately predict when a shipment will arrive. Some trucking companies will even guarantee the precise day and hour that a delivery will be made. This is very important because customer satisfaction is often based around on-time deliveries and accurate accounting of merchandise. This has also helped to reduce the cost of shipping freight, since trucking companies now have reliable, more direct routes to utilize. It indirectly affects cost because better roads create less wear and tear on shipping vehicles.
If a logistic team only concentrates on reducing freight cost, they could potentially lower customer service quality. Therefore, the goal of a logistics manager, or third party administrator, is to find a balance between cost and customer satisfaction. They must also be able to provide accurate tracking information, correctly estimate shipping cost, and be able to calculate delivery dates and times. By being organized, keeping cost low for the clients, and by making on time deliveries, freight management can help control the overall customer satisfaction of their clients.