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Understanding the supply chain
The supply chain consists of different stages of a client's order, whether it is a product or a service, from manufacturing to delivery.
It is mandatory to include anything relevant to planning, execution, or even controlling the different movements concerned. The supply chain section included with getting the finished goods from the producer to the purchaser is known as the distribution channel.
In the entire supply chain we come across these different streams such as the physical, informational, financial and administrative ones.
It also includes research and development, product development, sourcing, production, logistics and systems to manage these activities.
The extent of supply chain management and analysis will rely on the complexity and criticality of the merchandise and services to the company's core business.
In the supply chain we come across different actors such as:
- Manufacturing and fabrication actors: that come from various departments such as the marketing, engineering or even the creation department, which are jobs that are combined into the logistics chain.
- Warehouse and Logistics actors: which consist of warehouse management, inventory management and logistics, these are other aspects of the supply chain. A warehouse entails the interference of construction industry players. Storage actors are warehousing agents, insurers, security guards, etc. For inventory management, there are storekeepers, forklifts, dockworkers, logistics assistants, packers, inventory managers and logistics managers.
- Transport actors: There are mainly actors such as the charterer, the routing agent, the transit agent, the transport control agent, the shunting agent, the transport operations technician, the declarant customs, the rental of industrial vehicles, the mechanic, the last mile transporter, etc.
The importance of logistics in a business
To ensure the sustainability of a business and grant the loyalty of its customers, we have to ensure that the clients are satisfied with the products and services offered to them. In order to grant this satisfaction, the companies have to always implement the most efficient logistic service.
The logistics can include:
- Informational flow
- Production
- The handling
- The packaging
- Stock management
- Transport
- Security
Finding the right strategy can lead the business to acquire more benefits for its logistics management. This generates better quality, more speed and easier tasks. An effective usage of the logistics can bring numerous advantages for businesses.
Various methods appeared to facilitate the storage and supply processes, such as the Shared Supply Management. It consists mainly of a manner of delegating the management of supplies to the supplier, with more or less freedom.
The buyer offers data to the supplier, so he can take care of the replenishment. Surrogacy groups commonly two principal categories of inventory management:
- Vendor-managed inventory (VMI) It’s an inventory management practice where the supplier is the only manager of the supply (Quantity to offer, date of delivery, transport services management...etc).
- Co-managed inventory (CMI) consists of a business arrangement between the supplier and the customer, allowing the previous mentioned one to verify and validate the information linked to the order suggested by the supplier.
To sum up, the VMI consists of allowing the suppliers to take care of the stock levels of their products depending on the clients in a specific sale. It is possible to cope with major logistical challenges that lead to high VMI development.
Any distributor’s fear is to deal with a storage shortage that would generate an unwanted customer dissatisfaction and lost sales. The VMI here plays the hero role with its permanent data flow between different parties permitting a delivery cycle that avoids any sort of disruptions, based on the client’s consumption.
Managing the storage and inducing a reduction of costs can happen with an implementation of the VMI, which may be substantial (rental of a space for storage, employees for handling, insurance… etc). Therefore, we can see that thanks to the supply system, the stock is reduced to the strict minimum, or even non-existent.
Providing the manufacturer with all the needed data by the store represents one of the main issues considering its reliability. The central element of the VMI is the communication between partners, and that demands acquiring high-performance tools providing effective solution that would facilitate the dealing with any future challenges.
The main goal of the logistics is to always ensure the good quality of the products and services offered by the business to its clients, continuously improving satisfaction. If you are aiming to acquire a high notoriety and good reputation, it all lays in the hands of your clients and their satisfaction due to the word of mouth, or even via internet reviews.
Achieving an important economy either in the purchasing management, storage management or even the shipping management needs a good control of the logistics process because the logistics missions are numerous and bring out many benefits.
The role of Third-Party Logistics in the Supply Chain
As we previously said, the supply chain does cover the entirety of the operation. Everything from producing right down to the last-mile distribution falls well within the area of supply chain management.
Needless to say, the achievement of these procedures are always being developed upon and new ways of working performed. And a well-rounded third party logistics company knows how to adapt to these changes swiftly and efficiently.
The 3PL company seeks the most favourable rates, most reliable shippers, and gets all the paperwork started. Once the merchandises are ready for freight, the 3PL picks up the global order, registers the carrier, and transports the cargo to the nearest port. Finally, they make sure that it clears customs as it travels across borders to be received by your customer on the other side.
Lower risk
Finding a solid 3PL backed by an equally reliable network is a great way to prevent this from happening. Generally, third party logistics companies will ship your goods as FTL or FCL. This is good news for you because it means that your shipment is being transported by itself. The carrier does not have to make numerous stops, nor do they need to move your goods around to load or unload products from other shippers.
All in all, this method of transport saves time, money, and peace of mind.
3PL Reports
One of the best resources to have available in the shipping industry is that of reporting tools.
It is through the use of reports that shippers ensure their customers are happy and there is no disruption in the flow of goods through the supply chain. It is equally important that shippers can monitor the 3PLs that they choose to with and represent their brand.
And to be fair, most third party logistics providers make these reports available to their clients regularly. Well, at least the more reputable 3PLs do.
These 3PL reports usually contain data regarding the speed of your deliveries, accuracy of inventory lists, and order accuracy. Some reports contain many other key data points that are useful in helping a supply chain improve and scale.
Focusing on significant things
Operating with a third party logistics provider gives merchants the time to focus on what is relevant; growing a business.
A 3PL is there to supervise all the heavy-weight logistics stuff for you. They will take care of making sure that those orders get picked, packed, and fulfilled. Inventory forecasting? Leave that up to them.
You have a business to run and tons of useful data flying at you from your 3PL and their efforts. To do anything useful with either of those things, you need time, and time is exactly what third party logistics provide you.
Take full advantage of that extra time and go build an even stronger supply chain!
