Why Does Your Business Need a Logistics Management System?
AUG 14, 2024
With the pressure to secure customers and expand market presence, companies are overhauling their supply chains and logistics to ensure rapid, secure delivery in line with consumer expectations. According to Growth market reports, the global market for logistics software is expected to increase at a compound annual growth rate (CAGR) of 10.6% from its estimated $20.26 billion in 2022 to $50.17 billion by 2031. You sure would want to be part of it, don’t you? Look at Amazon for instance. Thanks to its exceptional logistics management, the company stands as the world’s largest distributor that provides customers with swift delivery, low prices, and straightforward returns. Eager to explore how a logistics management system can drive similar success in your business? Well, let’s find out together!
Understanding Logistics Management System
Logistics management is the careful procedure of acquiring, preparing, executing, and managing the flow of goods from origin to destination. The main objective is to deliver the service on time to the designated place while maintaining its quality which can be done through effective supply chain management. If you can strategically manage logistics, it can save both your transportation and warehousing management expenditures and build up consumer retention.
A Logistics management system handles everything from processing orders, and keeping track of inventory, to delivering goods to clients. It is quite similar to supply chain management solutions. It eases management by optimizing the production cycle. It will save your expenses, and improve supply chain visibility. It may sound quite similar to supply chain management but there is a big difference between these two terms.
| Logistics Management | Supply Chain Management |
| 1) Manages the flow, storage, and transportation of resources. | 1) Focuses on managing the flow of products from production to consumers. |
| 2) Includes activities such as material handling, order fulfillment, and inventory control. | 2) Involves activities like retail, manufacturing, returns, demand management, and forecasting. |
| 3) Functions cover sourcing, production planning, scheduling, and customer service. | 3) Functions include product development, marketing, operations, and customer service. |
| 4) Involves integrating and maintaining internal processes | 4) Involves coordinating and managing the entire supply chain |
| Eg: FreightMaster, Acumatica ERP | Eg: Oracle, HighJump. |
What are Business and Management Logistics?
Business and management logistics aim to optimize end-to-end delivery. Some firms like to have their in-house logistics team while most of the other companies rely on a third-party business logistics partner (3PL). It totally depends on how you want to manage the cash flow and handle the inventory.
In business logistics, material sourcing involves procuring raw materials and components, which then flow through the logistics cycle to become finished products. Transportation manages both inbound and outbound movements and handles the distribution of goods. Afterward the process and delivery of customer orders are monitored. In warehousing management processes, storage operations are optimized by handling merchandise returns. Shifts in consumer demand to align inventory flow are anticipated through demand forecasting. Inventory management ensures effective oversight of goods across warehouses, working closely with order fulfillment and demand forecasting. Supply chain management solutions integrate these elements to streamline these operations.
Go through with the 7 R’s of Logistics in Brief
1) Right Product: Deliver the exact item ordered, including any additional needs identified through automated systems.
2) Right Quantity: Ensure accurate listing and packaging of your inventory, whether sold individually or in bulk.
3) Right Condition: Inspect products for flaws or damages before shipping and offer an easy return policy to customers.
4) Right Place: Track and confirm delivery to the correct address to avoid costly errors or misdirected packages.
5) Right Time: Ensure timely delivery to meet customer needs and avoid returns. Late arrivals can lead to disruptions.
6) Right Customer: Address mistakes with an ERP system to ensure accurate fulfillment and maintain strong customer relationships.
7) Right Price: Set competitive prices and adjust according to demand and geographic market. Use insights to gain better profits.
Benefits of Logistics Business Management Software
1) Better visibility
A clear view helps identify and fix any slow spots or issues in the workflow. When businesses have access to real-time data and detailed insights, they can work more effectively with their partners and quickly adjust to changing customer needs. Better visibility also helps anticipate and manage potential disruptions.
2) Budget Optimization & Profitability
By automating tasks such as inventory management, delivery tracking, and dispatching, businesses can significantly reduce labor costs and minimize human error. Real-time inventory management helps prevent costly stock-outs and overstock situations by providing up-to-date information on inventory levels.
3) Enhanced consumer retention
If you effectively manage operations with a logistics system, the process will become more transparent and the consumer will receive the inventory on time in its mint condition. This not only improves the user experience but builds a positive image of your brand and customers are more likely to remain loyal to your brand.
4) Better Delivery of Products
The logistics business management software development team selects a squad of trained employees to oversee all product movements whether they are inbound or outbound to ensure timely delivery. This streamlined approach enhances accuracy throughout the supply chain. Products are dispatched quickly and securely to guarantee arrival at the designated time, place, and style.
Challenges that a Logistics management system can solve
1) Fulfilling the rising demand
In outbound logistics, meeting client requests on time is very tough. Panic purchasing and demand spikes affect consumer satisfaction, inventory stock levels, and the supply chain as a whole. It takes a large operation and careful preparation to ensure that the inventory is filled on schedule.
2) Transportation Roadblocks
Road transport handles approximately 60% of freight movement, compared to 32% via rail. The typical reasons for that are inadequate infrastructure, frequent traffic congestion, and numerous checkpoints that delay shipments. Companies face intense pressure from high order volumes, particularly during peak seasons like festivals which cause such roadblocks.
3) Inaccurate warehouse management
Inadequate order fulfillment, incorrect product packaging or shipment, lost goods, and damaged goods after delivery are some popular warehousing management errors. If such human mistakes are not controlled, the situation can go out of control and it can prove to be expensive for the organization.
4) Trade laws and globalization
Following complicated trade laws, customs processes, and compliance requirements are all part of managing international logistics. Non-compliance with these regulations can result in fines, operational disruptions, and damage to a company’s reputation. You might also face increased administrative demands as a result of tariffs, trade disputes, and geopolitical instability.
Future Trends & Shift to Sophisticated Logistics
1) Predictive Analytics
Using historical data, predictive models figure out patterns for mitigating future risks that guide businesses in decision-making. According to research by the Council of Supply Chain Management Professionals, 77% of shippers and 80% of 3PLs are already investing in technologies like predictive analytics to make the most of Internet of Things (IoT) data.
2) Blockchain technology
Blockchain or Distributed ledger technology makes more transparent audits, detects frauds, and reduces the need for third-party involvement in verifying the records. It provides an additional layer of security and plays a role in improving the traceability of the supply chain and the validity of the data.
3) Warehouse Automation
According to McKinsey, the warehouse automation sector is expected to grow at a relatively slow rate of 3 to 5 percent annually through 2025. Automated pallet-handling systems have reduced shipment processing times by up to 50%. They address labor shortages by reducing the need for manual handling and regulating faster picking, packing, and sorting processes.
4) Artificial Intelligence
Artificial intelligence in supply chain management enhances logistics operations by reducing operational costs and improving warehouse safety. By 2024, AI's application in logistics is projected to generate $1.3 to $2 trillion in annual economic value each year for the next 20 years. AI can cut delivery times and fuel consumption by optimizing routes, and achieve documented efficiency gains of up to 30%.
Use-cases of Logistics Management System
1) Showing Route information on car’s windscreens
While shipping goods, organizations employ AR/VR tech to make sure that the delivery is well-organized and safe. A vehicle’s windscreen can serve the purpose of gathering information about traffic congestion while the vehicle is carrying the load. By introducing such creative techniques, organizations can save time as opposed to consulting a different device to validate the data.
2) Transportation and cargo retrieval
The tasks that involve labor, manual data input, and processes can all be automated with warehouse automation and initial expenses can be avoided. Robots can be used to carry out cross-dock transportation from the warehouse to the shipping zone while inventory can be tracked by automated software.
3) Immediate feedback to RFQ
Bots can increase the likelihood of winning the RFQ and assist generate prompt estimates. By using bots, you may expedite the quoting process and react to RFQs more quickly while requiring less human participation. Because of their quicker reaction times and round-the-clock availability, bots can also help boost sales.
Bottomline: Choose the best firm for streamlining Business Logistics
Are you still on the fence about getting logistics business management software? Webelight Solutions Pvt. Ltd. is all set to clarify your WHYs, WHENs, and HOWs. We are highly skilled in developing the best logistics business management software and introducing innovative artificial intelligence in supply chain management operations to optimize your product delivery. We have been in the software development business for quite some time and have many successfully delivered end-to-end projects under our belt. By investing in the development of logistics business software, organizations like yours can gain a competitive edge in the market and boost their customer retention rate. It’s time to shift gears in your logistics operations and get your business back on track!
