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Logistics Management 101
The following article is submitted by Sedlak—providing independent, client-focused supply chain consulting services. Find out more at www.jasedlak.com.
Welcome to class. Lesson #1: Only a complete understanding of distribution costs, performance metrics and product characteristics details allows true management of logistics. To accomplish that, successful logistics management professionals [hereafter referred to as they] wrap their arms around the following:
Customer Satisfaction Philosophy
First and foremost, they understand their company’s customer service to satisfaction philosophy. What do they expect? For example, must an order be out the door within eight business hours after receipt? Does that include special product handling or customization?
Sales Projections for Five Years Out
To avoid surprises and secure business planning consensus, they plan sales projections five years out. Volume affects space utilization, labor resources, technology, robustness of software—even conveyor speed.
Every Detail of Every SKU Through the Entire Logistics Process
They know exactly how product will arrive, and already have appropriate amount and configuration of storage space. They work with their vendors/suppliers to standardize packaging for maximum utilization of their facilities.
They know the volume of inventory turns, the measure of how quickly they replenish their entire stock of materials or merchandise annually. They understand how product velocity, or speed at which a product moves from inventory to a customer, affects slotting and they make sure the facing of storage space is the right size.
Efficient logistics operations minimize the number of times a product is touched from receiving to shipping. To that end, successful logistics managers attempt to cross dock as much product as possible, identifying their backorder position at Receiving.
They determine inventory quantity and storage method because they understand characteristics of each product. Is it received by pallets, cartons or hanging on rails? Is it to be put away by truck or by hand? Is it perishable? Is it picked by truck or by hand? To conveyor or tote?
Labor
They know exact throughput volumes per time period and how many people are needed for the job. They know productivity standards for peaks and valleys.
Shipping and Transportation
They know if product is batch picked onto a mixed pallet, they’ll need order deconsolidation at the shipping dock. If product is picked to order onto conveyor, they often extend the conveyor right into trucks.
They remember their logistics operations end when product is in the hands of their customer, not the carrier. As they negotiate best rates with carriers, including zone-skipping capabilities, they keep customer expectations in mind.
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