The Chartered Institute of Logistics and Transport, an international organization for supply chain, logistics and transport professionals, defines the seven Rs of logistics as “getting the right product, in the right quantity, in the right condition, at the right place, at the right time, to the right customer, at the right price.”
And in truth, that is the goal of logistics management.
Right product: Job #1 is delivering the product that was ordered according to specifications: color, size, brand, quantity. But also consider an automated maintenance plan where manufacturers use IoT data to send a “just-in-time” replacement part, or something else that the customer may have not specified but needs. The point is to get buyers the products that are right for them or their situations.
Right quantity: Say an item can be purchased as either a single unit or in packs of 12, which are also considered a unit. On a larger scale, a manufacturer may sell parts in a box containing a few products or as a pallet of multiple boxes. Getting quantity right demands clarity in how inventory is listed as well as proper picking and packing.
Right condition: New, used or refurbished, customers expect a product to function properly and otherwise be useable. Products should therefore be inspected for flaws and damage prior to shipping. And, return shipping processes should be simple and convenient for customers.
Right place: Tracking to ensure receipt and that shipped items were delivered to the right address are essential parts of logistics management.A package that is never received and must be replaced costs a company twice—and damages the customer relationship.
Right time: Often, from the customer’s perspective, timing is everything. Whether it’s a consumer ordering a birthday or holiday gift or a manufacturer that needs a raw material to meet its schedules, late arrivals may cost the customer or be returned as no longer needed.
Right customer: Order mix-ups, address errors and other mishaps communicate a lack of respect for the customer and inattention to detail. An ERP system that automates outbound logistics can minimize errors and maximize a company’s supply chain execution.
Right price: It’s important that your pricing be competitive for the geographic area and the industry to turn your inventory regularly and at a good margin.It is also imperative to adjust pricing - up or down - according to demand. To succeed here, companies need continuous insights into profitability ratios and unit margins.
Extra:
4 Areas to Get Started With Business Logistics
Successful logistics is equal parts strategy and planning. Your strategy should encompass tactics to make the movement of goods work in your favor. Your plan should outline all the steps your company will need to take to bring your strategy to life.
Spatial management: Logistics requires sufficient space for goods; warehouse and material handling equipment; and people to receive, store, pick, package, label and ship goods. Your warehouse management strategy should focus on making wise use of space so that goods are handled efficiently while keeping square footage and maintenance costs as low as possible.
Management & staffing: One of the greatest expenses in any warehouse is staffing, so reducing picking time is a money saver. Inventory management software can show staff exactly where items are shelved and the best routes to take when pulling more than one item. Is your business seasonal? Plan for the necessary upsizing and downsizing in staffing to meet demand. You’ll need policies to guard against theft without making your people feel over-policed. Then there are benefits packages, workers’ comp insurance and other HR-related functions that are crucial to a well-managed logistics team.
Equipment: Logistics requires specialized equipment, such as a truck fleet, conveyor belts, robotics and forklifts or some combination, depending on the type of materials or goods your company handles and how much of the work you outsource. Besides the capital expense, managing equipment and related issues including maintenance, insurance and depreciation, requires careful planning and tracking.
IT infrastructure: Your IT infrastructure must to be optimized to accommodate functions from online ordering and purchasing to warehouse automation, IoT and other technologies key to your logistics strategy.
Transportation and logistics are central to a company’s success as it is the physical manifestation of transactions and without transactions there is no business. Managing logistics is also critical to the company’s financial health in that it can add or subtract money from the bottom line.
Source:https://www.netsuite.com/portal/resource/articles/erp/logistics.shtml#:~:text=Importance%20of%20Logistics&text=In%20business%2C%20success%20in%20logistics,and%20an%20improved%20customer%20experience.
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