In an increasingly competitive environment, companies must double their efforts to remain competitive. One of the keys to achieving this lies in structured logistics management. The logistics function enables delivery to the end customer under optimal conditions while maintaining business profitability. It thus plays a key role in operational excellence and customer satisfaction. Therefore, companies must ensure they have an efficient logistics function.
What is an efficient logistics function?
Logistics consists of managing a company’s physical flows and associated information flows. In other words, it features organising, coordinating and controlling the movement of goods from the production site to the delivery point at the end customer’s location.
As an essential link in the supply chain, the logistics function focuses on internal company operations. This includes:
- Procurement of raw materials;
- Stock management;
- Transportation management;
- Material handling;
- Product distribution;
- Returns management.
Thus, the logistics warehouse is at the heart of the supply chain.
The challenge is to orchestrate these different stages, from planning to execution, to ensure a fluid and efficient supply chain. Efficient logistics functions focus on optimising flows, enabling optimal customer service. This involves choosing appropriate strategies, tools and methods while optimising costs, space and time.
In this sense, logistics constitutes a genuine competitive tool. As Maxime Legardez, former founder-president of Everoad, explains: "Logistics is the hidden part of the economic iceberg. Although it often goes unnoticed, it flows through all sectors and connects all economic players, right through to consumers. Making logistics more efficient means simultaneously acting on three competitive levers: Reducing cost price, reducing lead times and reducing impacts on the environment."
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Procurement logistics (or supplier logistics), which covers the overall procurement management process;
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Production logistics (or industrial logistics), which concerns everything that happens within a warehouse: Product manufacturing, goods storage, stock management, order processing…;
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Distribution logistics (or transport logistics), which relates to delivering goods to the point of consumption.
Key levers for efficient logistics
To optimise logistics, companies must focus on three fundamentals: Strategy, digital tools, and key performance indicators.
An adapted strategy
The very first lever involves defining a logistics strategy adapted to your company. This involves conducting an assessment, taking into account all parameters:
- Number of orders to process;
- Nature of products;
- Type of storage;
- Available resources…
Based on these elements, the company can determine its logistics strategy (integrated, omnichannel, environmental or 4.0 logistics) as well as its flow management strategy (push, pull, just-in-time, or synchronous flows). The company may choose to outsource some of these activities to a service provider.
The right tools and technologies
The company must also rely on management software to ensure optimal control of teams and resources:
- ERP (Enterprise Resource Planning) to manage value chain activities;
- WMS (Warehouse Management System) for warehouse management;
- MSDs (Musculoskeletal disorders) for transport.
All these tools enable flow automation. New technologies such as EDI (Electronic Data Interchange) and API (Application Programming Interface) are also essential to facilitate communication. More recently, Big Data, combined with Artificial Intelligence, has paved the way for predictive analytics.
Key performance indicators
Lastly, it is essential to implement key performance indicators (KPIs) to manage logistics operations and identify necessary areas for improvement. There is a whole range of these, concerning:
- Safety;
- Storage;
- Transport;
- Productivity;
- Stakeholder satisfaction;
- Costs;
- Sustainable development…
It’s important to choose those that align with your company’s objectives and vision.
Today, the most popular indicators are:
- Service rate;
- Availability rate;
- Stock turnover rate;
- Occupancy rate;
- Shrinkage rate.
The advantages of efficient logistics
Much more than just a support function, logistics represents a strategic lever for differentiation. It offers multiple advantages for the company and other stakeholders.
Reducing costs
First, an efficient logistics function contributes to cost reduction. Transport routes are optimised, low value-added activities are eliminated, stocks are managed precisely… All this enables direct and indirect cost savings.
Improving customer satisfaction and supplier relationships
Customer requirements are increasingly demanding, whether in terms of delivery times, reliability or availability. Today, the quality of the logistics function plays a key role in the customer experience, as much as the products and/or services sold by the company.
In parallel, an efficient logistics function ensures fluid communication and simplified exchanges with suppliers, thus facilitating stock management and procurement. This enhanced collaboration also allows for anticipating needs and minimising stockouts.
Strengthening adaptability for better resilience
In such an uncertain and volatile world, every company must be both flexible and responsive. Faced with an order spike or delivery delay, an efficient logistics function can adjust its production and distribution without compromising efficiency.
Moreover, it contributes to securing procurement by working closely with suppliers, thus ensuring supply chain resilience. This proactive approach reduces the risk of disruption and ensures business continuity, even in times of crisis.
Improving image
A company with an efficient logistics function is perceived as reliable and structured. This can be a selection criterion, sometimes even decisive, for customers and potential partners.
As you can see, logistics can represent an undeniable competitive advantage. As an ultimate cross-functional function, it is fully part of any company’s value chain. An efficient logistics function will continuously optimise its processes, adapt to market challenges and serve its customers in the best possible way. Above all, it will participate in coordinating different company departments (procurement, production, sales, customer service…) by mobilising them around a common goal: End customer satisfaction.
