Supply Chain Management Pt 4: Logistics and Transportation

The Council of Supply Chain Management Professionals definition of logistics: “The process of planning, implementing and controlling procedures for the efficient and effective transportation and storage of goods including services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.  This definition includes inbound, outbound, internal, and external movements.”

Transporting products to customers can be a rigorous process! The process sounds simple but the details and procedure behind it are so much more complicated.  The topics are endless!  We will go over some highlights of logistics, transportation, and warehousing in this post.

Logistics

Image from MFC Cargo

Each product is different.  Logistics teams must work with various country’s import laws. The manner in which to transport them, who handles the delivery, insurance of the products, the procedures taken when an item is lost, tracking the items, and all the planning that goes along with it are all responsibilities of logistics.  All of course being efficient and cost effective for the company.  Logistics sets the path in which a finished product ends up in the customer’s hands.  There is also the opposite, called inbound logistics focusing on incoming materials and services.

Standardized containers you may have seen in a variety of modes of transportations from truck to train revolutionized supply chain.  No longer were items shipped separately in boxes where the product could easily be lost or stolen.  The standardized container shipped everything together and fit on trucks, boats, and trains allowing for easy loading and unloading.  By this container alone, supply chain was able to reach new heights.

Transportation

Image from NOAA

The logistics team must determine the most efficient mode of transportation for their goods.  Time, safety, and quality are of the utmost importance.  Many companies rely on logistics companies to send their product to their customers.  Again, companies relying on other companies for a job well done.  Supply chain coming full circle.  From air to ground transportation to the fastest and efficient routes, logistics teams must fulfill their customers’ requirements and successfully get the product to the customers.

Air, train, boat, or truck are all methods used to transport goods from the producer to the customer.  Typically, product to travel by air are the ones with high value-to-weight ratios.  Depending on customer

Warehousing

MISUMI USA Warehouse in Elk Grove Village, IL

Location, location, location! Warehousing, where everything is delivered, stored, packed and shipped! Many companies require the location to be in an industrial park for security reasons and ease of access for large freight trucks or even close to airports.  Warehousing contains inventory from shipping materials to shipping labels.  Depending on the breadth of product offerings, warehouses are a variety of sizes.

Some companies have found to not use warehousing but instead, use distribution centers.  This is a way to control inventory from staying in the warehouse for more than 48 hours.  The thinking behind this is to save cost by not storing unnecessary items.

Product packaging is also done in the warehouse.  Customers must be able to open the product easily and protect the items while in transit.  Packaging not only has to be aesthetically pleasing but also easy to store and display for the various ways stores are set up.

Although, Logistics and transportation are the last in supply chain management it is equally important as procurement, and manufacturing & operations.  It is a full circle of dependence, without one the others cannot operate.  This concludes our supply chain management series.  We’ve covered just a tad of what goes on in the supply chain.  It is complex and dynamic and it would be impossible to cover it all!

Cover photo by Northwestern Engineering

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