Importance of efficient logistics in the supply chain

A single error or interruption in logistics can trigger substantial financial losses in an organization.
The main objective of this business activity is the planning and management of each and every one of the operations that directly influence the flow of raw materials, semi-finished products and finished products, from their origin to the final consumer.
In other words, it is vital to get the products from the raw material supplier to the user.
Therefore, the proper functioning of logistics is crucial for the supply chain and the success, profitability, credibility and brand image of any company.

What is the supply chain?

A supply chain is the process that makes possible the transformation of raw materials into finished products for delivery to the end consumer.
Effective supply chain management increases profitability and is critical to improving and sustaining an organization’s financial position.
Within the supply chain, logistics plays a vital role in the management of warehousing and transportation activities, as it is the link between production centers and markets.
Good planning, management and control of the storage of goods, as well as the necessary services and the flow of information from the point of origin of the product to the point of consumption, in order to meet consumer demand, depend directly on logistics.
In the logistics process, two fundamental channels are used to make it possible for the product to reach the final consumer:

• Supply channel: products or raw materials are moved from the extraction center to the distribution warehouse or factory.
• Distribution channel: it is in charge of moving the finished product from the warehouse or factory to the point of sale.

Logistics objectives

Logistics has the priority objective of satisfying demand in the best conditions of quality, cost and services.
By guaranteeing the quality of the product or service, it will bring a competitive advantage to the company and by reducing costs, it will help to increase its profits.
To achieve these objectives, logistics manages the necessary means, such as premises, means of transport or computer management software, and mobilizes the most appropriate human and financial resources.
Good logistics planning is based on five pillars:

1. Acquisition of materials in the best possible conditions to avoid unpacking, preparation and subsequent adaptation operations.
2. Reduction of transportation costs, grouping loads and minimizing stages and travel distances.
3. Cut handling costs by reducing the number of times goods are moved to the lowest possible number of times.
4. Reduce stock classification groups and minimize the volume, space and number of storage areas.
5. Reduce the number of revisions and stock controls to only those necessary and in the easiest and most comfortable way possible.

Importance of logistics in the supply chain

The transcendental role of logistics in the supply chain is reflected in the following benefits:

• Increases customer satisfaction.
  Timely and efficient delivery of a product or service to its final consumer is the basis for a satisfied customer.
  Logistics must ensure that delivery deadlines are met and that the consumer receives a quality product in perfect condition.
• Increased profitability.
  Logistics must ensure that the supply chain has quality review and performance management activities in place to minimize risks during the purchasing, production and delivery processes.
  This has a direct bearing on optimal operating costs.
• Maximizes the level of preparedness of a commercial establishment.
  Good supply chain management ensures that a company is prepared for unforeseen events, contributing to the timely analysis of problems and the development of efficient solutions.
• Ensuring the efficient transfer of information in the supply chain.
  In most cases, communication runs opposite to the supply chain process, i.e. from end users to suppliers.
  For efficient communication along the entire supply chain, companies need to apply advanced technology to ensure the success of the entire process.

In conclusion, logistics plays a decisive role in the success of any company.
A role that is reinforced in today’s extremely competitive environment.
These good results are achieved with the correct functioning of the primary tasks of the supply chain, which have as a fundamental objective to meet the expectations of customers in terms of service, quality and cost.
We could say that logistics is the backbone of a company’s business,which iswhy itmust adapt to different
and therefore must adapt to the different stages and moments we live in. A current example is the impact of the pandemic on the change in the business model of many organizations, with the consolidation of online sales and e-commerce. The role of logistics has been decisive in maintaining balanced operational continuity, flexible production, the supply of critical components, attention to new market niches and the launch of new sales channels. Challenges that are still very topical and for which logistics must continuously adapt and innovate. Its objective: to boost the productivity and profitability of organizations[:].