Supply Chain is a critical process for any international company that seeks to offer products or services to its customers. This chain includes all the activities involved in the production and delivery line of a product, from obtaining raw materials to delivery to the final customer. An efficient supply chain is of great importance to ensure that products are produced and delivered in a timely manner, with quality and at a reasonable cost.
Logistic chain concept
The supply chain concept refers to a broader and more comprehensive approach than the supply chain, such as the 3PL system. The logistics chain includes all activities involved in the planning, implementation, supply and control of the flow of goods, services and information from the point of origin to the point of consumption, with the aim of satisfying the needs of customers efficiently and effectively.
What are the elements of the logistics chain?
The elements of the logistics chain are those components necessary for it to operate efficiently and effectively. These elements are the following:
- Suppliers: Are those that provide the necessary inputs for the production of goods or services. These inputs can be raw materials, components, services, equipment or supplies necessary for production.
- Production: It is the development of transformation of inputs into finished products. This process may include production planning, manufacturing, quality management, and continuous process improvement.
- Storage: It is the management of the space where the finished products and the necessary inputs for production are stored. It includes planning storage space, organizing inventory, and managing warehouse safety and efficiency.
- Transport: It is the physical movement of merchandise and inputs throughout the logistics chain, from the supplier to the end customer. This process includes transportation planning, fleet management, carrier selection, and traffic optimization.
- Inventory management: It is the management of the stock level of finished products and the inputs necessary for production. It includes planning and control of inventory levels, demand management, demand forecasting, and reducing costs associated with inventory.
- Demand management: It is the management of the forecast and the planning of the demand of the products. It includes demand forecasting, production planning, capacity planning, and managing inventory levels.
- Customer service: It is the management of customer interactions, problem solving and customer satisfaction. It includes customer service, claims management and after-sales service.
- information technology: It is the management of the systems and information necessary for the control and optimization of the logistics chain. It includes information systems management, enterprise resource planning, data analysis, and supply chain management.
- Staff: They are the people involved in the management and operation of the logistics chain. This includes production, warehouse, transportation, inventory management, demand management, customer service, and information technology personnel.
What is the objective of the logistics chain?
The main objective of the logistics chain is to ensure efficient and effective delivery of products in addition, services to the end customer, through the integration of the different elements that make up the chain.
This involves coordinating and optimizing production, transportation, storage, inventory management, demand management, customer service, and information technology processes so that products arrive at the right place, at the right time, and in the right conditions. , at the lowest possible cost. In addition, the logistics chain also seeks to maximize the profitability of the businessreduce production costs and improve the efficiency and quality of processes.
What are the characteristics of the logistics chain?
The characteristics of the logistics chain may vary depending on the specific needs of each company, sector or market, but in general, some common characteristics can be identified that are important for its proper management and operation. Some of them are mentioned below:
- Integration: The logistics chain is made up of different elements, which must work in a coordinated and integrated manner to achieve the objectives of the company. This implies chain management from a holistic perspective, in which the different processes are coordinated and their operation is optimized globally.
- Flexibility: The logistics chain must be able to adapt to changes in demand, markets and environmental conditions. For this reason, it is important to have flexible processes that allow adjusting production, transportation, storage, inventory, and customer service, based on the changing needs of the company.
- Efficiency: The logistics chain must be efficient in managing available resources, reducing costs and maximizing productivity. This implies an effective management of the planning, control and measurement of the processes, to identify opportunities for improvement and optimize the use of resources.
- Quality: The logistics chain must guarantee the quality of the products and services delivered to the end customer. For this, it is essential to have quality control processes, supplier management and customer service, which allow guaranteeing customer satisfaction and loyalty.
- Innovation: The logistics chain must be in constant evolution and adaptation, to take advantage of the opportunities for improvement and differentiation in the market. This implies the search for new solutions, technologies and processes that make it possible to improve the efficiency, quality and profitability of the chain.
- Collaboration: The logistics chain involves different actors, from suppliers to end customers, so it is important to encourage collaboration and teamwork among them. This allows better coordination of processesan optimization of costs and an improvement in quality and customer service.
How to make a logistics chain?
The creation and management of an effective logistics chain involves a series of steps that may vary depending on the specific needs of each company and sector. Here are some steps that can be followed to create a supply chain:
- Define objectives and requirements: First of all, it is important to define the objectives of the logistics chain, as well as the requirements necessary to achieve them. This implies establishing goals in terms of costs, delivery times, quality, customer service, among other aspects.
- Identify and evaluate suppliers: A search must be carried out for reliable and efficient suppliers that can offer the necessary services and products for the logistics chain. It is important to evaluate suppliers based on their capacity, quality, price and delivery times.
- Establish the processes: The necessary processes for the logistics chain must be defined, from planning to delivery to the final customer. This includes inventory management, production, transportation, storage, order management, returns management, supply chain management.
- Establish performance indicators: It is important to define the performance indicators that allow measuring and monitoring the effectiveness and efficiency of the logistics chain. This allows you to identify opportunities for improvement and make decisions based on data.
- technology selection: The necessary tools and technologies for the management of the logistics chain must be chosen, such as inventory management systems, order management systems, shipment tracking systems, among others.
Why is the logistics chain important?
The logistics chain is important for several reasons:
- Customer satisfaction: The logistics chain is essential to guarantee customer satisfaction, since it is responsible for the delivery of products and services at the right time and place, with the expected quality and at a reasonable cost.
- Operating efficiency: The logistics chain allows optimization of the processes and resources involved in the production, storage and distribution of goods and services, which can improve operational efficiency and reduce costs.
- Competitive advantage: The implementation of an efficient and effective logistics chain can generate a competitive advantage for companies, since it allows them to offer better customer service, reduce costs and improve quality.
- Supply Chain Integration: The logistics chain is essential to integrate the processes of the supply chain, from production planning to delivery to the final customer. This allows for greater collaboration and coordination between the different actors involved, which can improve efficiency and reduce errors.
- Adaptability to change: The logistics chain can help companies adapt to changes in demand and market conditions. By having a flexible and adaptable logistics chain, companies can quickly respond to market needs, such as adjusting their production and distribution accordingly.
Logistics Chain Examples
There are many examples of logistics chains in different industries. Here I present some of them:
- Logistics chain in the food industry: This logistics chain includes all stages from production to delivery of food to final consumers. This involves growing, processing, packaging, storage, distribution and sale. Each of these processes must be properly managed to guarantee food quality and safety, cost efficiency and customer satisfaction.
- Logistics chain in the automotive industry: This logistics chain includes all stages from manufacturing to delivery of vehicles to dealers and end customers. This involves sourcing materials, manufacturing components, assembling vehicles, transporting, storing and selling.
- Logistics chain in the fashion industry: This logistics chain includes all stages from manufacturing to the sale of clothing and accessories. This involves design, production, transportation, storage, and wholesale or retail sale.