The logistics function in the company: your complete guide
In France, the logistics sector is one of the most dynamic in the world, with almost 2 million jobs.
The logistics function may sound like a mathematical function to you, but we're going to focus mainly on the role and management of logistics in companies.
Why do we do this? At a time when products need to be dispatched ever more quickly, it is essential to master the various logistics optimisation tools to satisfy your customers and increase your sales.
What is the logistics function and what are its specific features? Understand each of its stages now to ensure that they run smoothly throughout the supply chain and boost your performance.
What is the logistics function? Definition
François Verhulst's logistics function was originally used in mathematics and corresponds to an exponential (growth) function. It is used to illustrate the state of diffusion of an innovation during its life cycle and is very useful for boosting business performance.
In other words, the aim of the logistics function is to optimise production, distribution and information by reducing costs, and is central to any good supply chain manager.
It includes
- supply of raw materials and semi-finished products (supply chain),
- production organisation (quality control in particular),
- physical distribution (storage, handling, transport, distribution channels, after-sales, etc.).
In short, these are the logistics processes specific to sales, from storage to dispatch of your products to your customers.
What is the difference between inbound and outbound logistics?
Inbound logistics
Inbound logistics are all the logistics activities that take place before the production process (storage and production). It covers all the activities involved in providing a company with all its products (raw materials, equipment, semi-finished products, etc.) by the deadline and in the quantities requested.
Who is involved and why?
A player offering inbound logistics services carries out all the necessary operations, starting from the storage location and transporting the products to the production or assembly warehouse.
Its tasks include
- managing the supply of raw materials
- choosing suppliers
- ensuring that products are received correctly
- optimising purchases.
As you will have realised, the aim of logistics is to optimise physical flows in order to deliver the best possible quality of service in line with a customer's needs and expectations.
Downstream logistics
Downstream logistics, or distribution logistics, is the set of logistics activities designed to make finished products available to customers. This involves delivering products directly to consumers.
It is important to choose the optimum quantity to deliver to your customers, but above all to do so in the best possible conditions. If your products are damaged in transit, or even missing altogether, customer satisfaction will suffer.
Downstream logistics covers :
- planning logistics projects
- output order,
- packaging
- warehousing
- order preparation
- transport and delivery to the end customer.
Why develop your company's logistics function?
You now know what a logistics function is, but why is it so important for your company?
Coordinate to optimise
Logistics is essential for everyone in your company, because it is a cross-functional function, in other words, it links all the departments together as efficiently as possible.
In short, if you succeed in organising and mobilising the various departments in your company, the time you save can be reallocated to other activities.
Logistics is as practical in the short term (coordinating physical flows) as it is in the medium and long term (organising and optimising production, distribution and storage systems).
Optimising to be more competitive
When used correctly, logistics organisation can give you a competitive edge. It enables you to stand out from the competition and increase your sales.
By organising your supply chain more efficiently than your competitors, you open up new possibilities. For example, your choice of suppliers will be more diversified and of higher quality. If you have a reputation for optimising your logistics function, it's logical that other companies will want to work with you.
The 3 advantages of the logistics function
Quality of service
Quality of service is naturally at the heart of customer relations. In fact, it has a major influence on customer satisfaction. Let's not forget that satisfied customers are more likely to tell their friends and family about your products, and so bring in new customers without incurring additional advertising costs for you.
In addition to stock management, logistics management enables you to track products in circulation and ensure that they reach their destination on time.
Finally, optimised logistics management means that parcel deliveries are carefully monitored. It is essential to respect delivery deadlines and ensure that all products arrive on time, in order to maximise customer satisfaction.
Customer satisfaction comes from a variety of sources:
- speed
- regularity
- punctuality of deliveries or production,
- respect for the intrinsic qualities of the product
- the accuracy of product-related information flows,
- optimised after-sales service.
Make sure you apply these elements to ensure maximum customer satisfaction.
The benefits :
- Reduce your costs (inspection fees, rework, loss of raw materials),
- You increase your productivity,
- you don't need to make major investments (all you need is a deep commitment).
Cost control
The company's logistics function manages flows as efficiently as possible to reduce the following main costs:
- supply costs
- transport costs
- production costs
- storage costs.
You can use these indicators to measure the performance of your established system and assess where you can improve:
- for supplies: availability rate and delivery times,
- for stock control: monitoring stock value, value losses and stock coverage,
Tip: Wilson's formula is perfect for finding out your optimum order quantity. - for transport: average cost per product and how full the means of transport is.
Some indicators are difficult to identify, such as the cost of insufficient stock rotation, but the more you identify them, the easier it will be to reduce them.
How can an efficient logistics function help to reduce your costs?
Here are a few ideas:
- optimise packaging by using all the space available in packages, cartons or pallets, and make sure you don't send half-empty parcels,
- Fill the containers as full as possible for the different types of transport you choose,
- reduce the weight of your shipments.
Tip: Set up a transport plan that identifies flows and the different types of traffic and concentrate only on those that cost you the least. - Change your logistics service providers according to your needs (find the right balance between price and quality of service, such as geographical area, lead times, careful handling of parcels, etc.),
- optimise your logistics function with new technologies (software, applications, web platforms such as Transport Management Systems or WMS to improve warehouse logistics management).
Brand image
Good logistics have an impact on a company's branding, as they are often the only physical point of contact between buyer and supplier. A good brand image gives your company a positive and easily identifiable image.
Image is considered more effective and encourages commitment. It stems from the characteristics of the products and/or services on offer, and when the perception of the brand's image is positive, it encourages the marketing of the product, and can therefore justify charging high prices.
So, by developing your logistics organisation and responding to your customers' needs as described above, your customer network will be all the more developed and so will your performance.
Article translated from French