The movements of raw materials to your manufacturing site or the movement of goods from your site, suppliers, terminals, or other locations to your customers.
What it is: Freight and Shipping issues (Logistics) are the processes needed to move products to and from your facilities and to your customers
What does it do: Logistics constitute a significant cost to your business and must be managed to create a competitive advantage or avoid them becoming a competitive disadvantage in your market place.
Uses:
How is it used: Logistics are used to receive needed raw materials and supplies to your company sites and to move products from your company to your customers.
Where: Primarily logistics can be broken down into 1). Inbound logistics and 2). Outbound logistics
Inbound logistics brings raw materials and supplies to your manufacturing sites, offices or terminals, and warehouses
Products can be brought to your locations by ship, rail, truck, car, mail, air, etc.
In general, costs of shipping are lowest for the shipping process with the largest capacity (ships, then rail, then truck, etc.)
The larger shipping capacity carriers require larger shipment sizes, so if your product shipping quantity needs are small, you will need to ship by the higher cost smaller capacity shipping options.
Just in time shipping (receiving inventory only as it is needed and not carrying any "in stock" inventory) will keep the inventories stored at your location smaller, but close coordination with your supplier and marketing departments will be necessary to avoid raw material outages at your plants.
Outbound Logistics sends products from your manufacturing facilities to your customers or terminals.
You should manage the shipping to your customers by arranging shipping by the most economical method.
You can utilize a third-party logistics company to handle all of the shipping arrangements
If another company makes your products, you can arrange for them to supply your customers directly
Some retailers like Amazon, will inventory your products at their warehouses, or arrange for the products to ship directly from your warehouses or your supplier's warehouses.
3PL companies (third-party logistics companies) can manage the consolidation of your freight to reduce the costs of warehousing and shipping.
Why: There are many issues with logistics that can thrill or terrify your customers and can greatly increase or decrease your revenues and profits.
Limitations:
Where it shouldn't be used: If you are a small supplier using a 3PL (third-party Logisitcs supplier) is often superior to trying to manage your own logistics.
Any restrictions: None
Warnings: Trying to manage your own logistics when you do not have the resources in house to do a good job could end up costing you far more than outsourcing those activities.
A transportation management system has several elements. The following description is given by Technopedia: Transportation Management System
Definition - What does Transportation Management System (TMS) mean?
A transportation management system (TMS) is part of supply chain management (SCM) centered on transportation logistics. A TMS enables interactions between an order management system (OMS) and distribution center (DC) or a warehouse.
TMS handles four important operations of transport management:
Planning: Defines the best transportation strategies based on specified parameters, which would be of higher or lower importance as per the user policy. This includes transportation expenditure, minimum stops possible to guarantee the quality, shorter lead-time, flows regrouping coefficient, and so on.
Transportation execution: Enables the transportation plan execution. This includes carrier-rate approval, carrier sending, electronic data interchange (EDI), etc.
Transportation follow-up: Permits the following up of any administrative or physical operation regarding transportation. This includes event-by-event transportation traceability, receipt editing, customs clearance, invoicing as well as reserving documents, transport alerts delivery, etc.
Measurement: Includes or should include a strategic key performance indicator (KPI) report functionality for transportation.
Standard TMS software modules consist of:
Load optimization
Route planning and optimization
Delivery
Freight audit, payment, etc.
Yard administration
Advanced shipping
Order visibility
Carrier administration
TMSs are intended to reach the goals mentioned below:
Minimize expenditures by means of more effective route planning, load optimization, carrier combination as well as model selection.
Enhanced accountability with exposure to the transportation chain.
Better flexibility to make modifications in delivery plans.
Realization of important supply chain execution demands.
Output representation and recommendations:
PowerPoint presentation to review philosophy and elements of the Logistic plan
