Supply chains are very complex living beings. They are made up of many parts and it is often easy to walk over one of them without paying enough attention to it. Somewhat hidden under the general concept of supply chain is supply logistics, and today we want to give it the space it deserves. So we are going to analyze and explain one of the parts of logistics that has the greatest potential for improvement for companies.
What is supply logistics
Supply logistics includes all actions aimed at ensuring that our company has a continuous and controlled flow of all the essential materials for its proper functioning. In other words, it manages and rationalizes the arrival of products or raw materials to our company, leaving out what happens to them once they have left our facilities.
Procurement logistics includes companies that have yet to transform the goods or raw materials they receive and also retailers that are already going to put the product in the hands of the end customer. Everything that involves having to receive merchandise and how to optimize these processes will be within supply logistics.
Supply logistics tasks
Managing all the supplies of a company encompasses a large number of functions.
Optimize the demand forecast: to know how much we need to buy, it is essential to know how much we expect to sell. Also, to how much you have to add the when.
Select inventory models and analyze their performance: the way in which we are going to store the merchandise received and control over how we are doing it is also vital. How to organize the merchandise according to its level of rotation, the accessibility to place orders, the expiration date, and many other variables.
How are we going to receive the supplies: are we going to have our suppliers consolidate their merchandise with each other before it reaches us or are we going to receive it from each supplier separately? Will we have proximity providers or centralized and further away? Will we work with crossdocking, tight flow, will we store material?
Efficiently manage the flows of merchandise in the company: supply logistics must trace the way in which the products are received, stored and moved once they arrive at our company. In this optimization, companies generally have great potential for improvement.
Establish a traceability system and share information: achieving transparent supply logistics will be a boost for your supply chain. There are many departments and processes that depend on the correct receipt of goods, so being able to keep everyone informed in real time of what is happening will make their lives easier.
Reception of the material: we have to manage how the materials are received, the way in which it is verified that what has arrived is correct, both in number and in quality and good condition. And, finally, manage the relevant claims.
Supply logistics has to deal with some characteristics that can make it especially complicated. This is the case of retail establishments, which are required to host a large number of SKUs that often also come from a large number of suppliers. Something similar to what happens with large supply chains, in which the large number of actors present increases the complexity of organizing so many interdependent relationships.
Another factor that has increased the importance of supply logistics is the globalization of logistics. We have more and more extended supply chains throughout the planet and that mean longer replacement periods and more possible complications. It is not the same to solve a problem when your provider is 10 or 100 kilometers away than when it is several thousand.
It is essential to know and define the specific needs that we have
The importance of the purchasing department
Logically, the first step for a product to reach us is that we have agreed to purchase it. And how we make that purchase will depend, to a large extent, on the quality of our supply logistics.
First of all, we must be able to correctly define what are the specific needs we have. For example, studying whether a single product could cover the needs for which, up to now, we have bought two or more references. In the same way, specify the characteristics of the product that we need, its technical aspects, etc.
If we want to make sure that we meet our goal of ensuring the flow of materials for our company, we also need to agree on delivery terms, the timeframe from ordering to arrival, and any details that may affect these supplies. Issues such as supports or packaging can be decisive for a company, and it will not be strange to have to specify if we want our orders on pallets, up to a certain height, up to a certain weight or with a certain order.
Once we know all this, it will be time to choose our suppliers and keep track of them (the ones we use and the possible alternatives). It is also necessary to establish some rules about the characteristics of the suppliers and their contracting: requirements, payment methods, etc. Standardizing these aspects will professionalize the management of your purchases and provide a stable base to evaluate and improve your results.
It is necessary that the people who deal with the contracting of suppliers do not stop looking at the long term. It will be your task to analyze the rises and falls of prices, in order to be able to anticipate trends and be able to buy products in advance if a price increase or even a possible shortage is expected. It’s also important to always keep negotiations with providers open and revise rates as circumstances change.
The relevance of supply logistics is due to its influence on two key points in every company: quality and costs. Ensuring the receipt of the necessary supplies in a timely manner is essential for us to provide a punctual and quality service to our customers. And the optimization and management of our purchases and reception and storage operations will have a direct impact on our costs.
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