Logistics is a multidisciplinary science. It encompasses many activities, very varied departments, different professionals and usually involves several companies throughout its journey. But its diversity does not end here. If we talk about the functions of logistics, what it tries to achieve with its activity, the range continues to expand more and more.
To help understand this range of logistics functions we have divided them into activities, tasks and objectives (which we will see in the next article).
What are the functions of Logistics
Transportation: transportation is the part in which the merchandise, already loaded on the vehicles, transits from its origin to its destination. Although summarized like this it may seem easy, here we include everything from delivering an envelope a few hundred meters to taking a container to the other end of the planet.
Storage: we are at the opposite point of transportation. Storage is the activity of custody of the merchandise waiting to be used. Procurement logistics is also usually included here, which is in charge of how the merchandise that we have to treat arrives to us (either by storing, handling, issuing again, etc.).
Inventory management: Inventory management completes the work done by the warehouse. Inventory management monitors the stocks we have, the way in which they are replaced, the notices for the replacement of stock, etc. It is one of the segments in which more cost savings can be produced, although it is often not given enough attention.
Order preparation: this activity occupies from the reception of the order to its availability for transport. Among his responsibilities: order processing, picking, packing, cargo conditioning and the study on the automation of processes and systems used.
Reverse Logistics: Reverse logistics is the protagonist in the last stretch of logistics. Whether they are returns before or after the merchandise has reached its recipient, reverse logistics must recover the material and/or its possible waste and take it back to a point where it can be reconditioned or discarded.
Subcontracting: it is common to underestimate the work of subcontracting. As we are not directly in charge of the activity, there is a tendency to downplay its importance, consider it completed or not keep track of the subcontracted processes. However, 95% of companies outsource some logistics activity, which makes clear the great importance of this section.
Making everything flow and make sense could be the motto of logistics
As we have seen, the activities are in a certain way the most operational description of what happens in the logistics activity. The visible part of the iceberg, so to speak. With the tasks we are going to elevate the point of view a bit and move towards more strategic objectives, which often comprise several of the previous activities.
Making everything flow and make sense could be the motto for logistics. Eliminate inefficiencies, find the shortest and safest paths for goods and information, avoid duplication of work, create internal or external synergies… Everything that makes logistics more “rational” is at the core of the tasks of logistics.
Coordinate processes and resources
A common analogy in logistics is that of the conductor. We have already emphasized the wide variety of activities, departments (marketing, accounting, sales…) and professionals involved in logistics, so being able to put everyone to work in the same direction is a giant step for companies. logistics functions.
Process design -how we do things- and how these are intertwined step by step is what allows us to avoid bottlenecks and traffic jams in our logistics. The difference between coordinated and uncoordinated logistics is the difference between success and failure.
Simplify and deal with complexity
Here we find two similar but not identical logistics functions. To simplify is to make simpler what is unnecessarily complex. Optimize the location of merchandise in the warehouse, provide tools for order preparation, eliminate intermediaries that do not add value and errors when sharing information, etc.
On the other hand, dealing with complexity means admitting the existence of processes that by their very nature have a high level of difficulty. This is a growing reality for logistics today, which is involved in an increasingly demanding environment: shorter deadlines, longer distances, a greater number of suppliers, catalogs with more references, reduction of stocks, more sources of information. … Are we going to be able to develop processes, tools and work teams that are capable of coexisting and working in these complex environments?
A cautious logistician is worth two. Planning is fundamental and its importance does not stop growing. Logistics must draw up a master plan in which it adjusts its needs with its available resources. What will my claim be? How many shipments will I have to prepare? When will I have everything I need to prepare them? How much do these shipments weigh and occupy? How long will it take me to prepare them and what does it cost me to do it? How long will it take to deliver them? What will happen if there are defects when delivering them and how much time do I have to solve it? What will be the total time that elapses from when you receive the order until its delivery is finished?
Demand planning, by itself, already requires the joint work of many departments (sales, marketing, logistics, etc.), which gives an idea of its complexity. However, despite all these questions and difficulties, really planned logistics will be able to answer them.
So far we have reviewed the “what” of logistics. In our next article we will address the “why”, the objectives for which it is carried out and the goals it intends to achieve once its activities and tasks have become a reality. We will see the customer gain prominence, their needs and their new demands -as in environmental policy- and how logistics helps your business stand out from your competition.