Logistics Operations: How to Optimize Your Supply Chain Management
October 23, 2020
An ecommerce logistics operation is the backbone of an ecommerce business and it plays a vital role in driving sales and preparing for future growth. The strength of your operations impacts the ability to meet customer demand. This makes it very important to implement an ecommerce logistics strategy with the right processes, technology, and logistics infrastructure in place to ensure you’re able to deliver a quality product to your customers.
In this article, you will learn how to improve your logistics operations by finding ways to optimize your retail supply chain.
What are logistics operations?
Logistics operations is an essential part of the supply chain and refers to the process of moving finished goods, starting from the manufacturer and moving to the end user. The entire inbound and outbound logistics process consists of managing ecommerce inventory, and fulfilling and shipping orders. Inventory management, warehousing, and order fulfillment all play a key role in optimizing ecommerce logistics.
Why are logistics operations so important for ecommerce?
Depending on the systems and processes you have in place, your ecommerce supply chain can make or break your business. Since ecommerce logistics has many moving parts, inventory management becomes a challenge without proper ways to track ecommerce inventory throughout the process. You can end up with too much product, which can lead to deadstock and high carrying costs, or have too little, which can cause stockouts and shipping delays.
Without streamlined logistics operations, you will end up with several loose ends that impact both your profit margins and customer satisfaction. Therefore, having a cost-effective, streamlined logistics operations process in place will help to keep logistics costs down, reduce risk and human error, and keep your customers happy.
Logistics operations: 4 key processes
Logistics operations are made up of a series of processes that work together to optimize the supply chain, from delivering goods from the manufacturer to the seller, all the way to last-mile delivery.
1. Suppliers and manufacturers
Obtaining raw materials is the first part of supply chain management, which is taken care of by the manufacturer or supplier. A dependable manufacturer is responsible for tracking the work-in-process inventory phase (i.e., the movement of raw materials being processed into finished goods) to make sure you get a high-quality, sellable product on time and at the most affordable price.
Choosing the right supplier is important; manufacturers that are inconsistent in delivering a quality product and/or shipping inventory to the seller can slow down operations from the very start.
2. Distributed fulfillment centers
Fulfillment centers are warehouses that hold inventory close to the end customer, so each order is picked, packed, and shipped as soon as it’s placed to ensure the fastest delivery possible. Many direct-to-consumer (DTC) brands depend on a third-party logistics (3PL) company that performs ecommerce fulfillment services. That way, they don’t have to worry about fulfilling and shipping orders themselves.
Another key benefit of partnering with a 3PL is the ability to distribute inventory across logistics centers. For instance, ShipBob is a retail fulfillment company that offers a robust international fulfillment center network that allows merchants to split inventory across locations to be closer to their customers. This reduces shipping costs and speeds up delivery.
Warehousing is a key stage in the logistics operations process that involves storing and managing physical goods before they are sold. There are several key parts to warehouse management, including the safety and security of stored goods, inventory control processes that help to optimize inventory storage, and much more.
These crucial operational warehouse management systems help to track where items are located, when they arrived, and how long they have been there.
Orders that are shipped to customers accurately and quickly speaks to how well you run your logistics operations. Although the execution of shipping orders to their final destination is ultimately up to the carrier, you can choose which shipping methods to offer your customers (e.g., standard via ground, expedited shipping via air, etc) and to which locations (domestic vs. international shipping).
You also have the option to ship orders in-house, most often which involves standing in line at the post office. Otherwise, you can outsource fulfillment to a company that has access to discounted shipping rates from major carriers and can take care of the shipping process (and all other logistics operations) for you.
4 logistics operations that optimize your supply chain management
There are several ways to improve logistics operations, and you don’t have to go at it alone. Many ecommerce businesses rely on a logistics service provider like ShipBob to help optimize their supply chain, from inventory management to shipping orders.
1. Inventory management processes
Implementing inventory management software can help you better track inventory levels in real time. ShipBob’s technology comes with built-in inventory management tools to help you optimize inventory levels, lower inventory storage costs, set automatic reorder points, and more.
“Having access to live inventory management not only helps with our overall process in managing and making sure our inventory levels are balanced but also for tax purposes at the end of the year. ShipBob made that entire process very simplified for our accountants and us.”
Matt Dryfhout, Founder & CEO of BAKblade
2. Automated order fulfillment
Picking, packing, and shipping orders is a huge time commitment and can take you away from more important, money-making tasks. Fortunately, there are several ways to automate the order fulfillment process with a 3PL partner.
With ShipBob, you can sync your store with our fulfillment technology and store your inventory in one or several of ShipBob’s fulfillment centers. From there, orders are automatically fulfilled from the location that’s closest to the shipping destination. Once the order has been fulfilled and shipped, tracking information is automatically sent to your customer.
“We monitor the ShipBob dashboard on a daily basis, can view our fulfillment metrics at any time, and see if orders are fulfilled accurately.”
Manuel de la Cruz, CEO at Boie
3. Warehouse management systems
A warehouse management system (WMS) can help you manage inventory levels and storage, improve productivity, and efficiently fulfill orders. This results in significant time savings and reduces human error by automating time-consuming logistics operations processes.
ShipBob’s fulfillment centers are powered by our proprietary warehouse management system that lets you know what’s going on in ShipBob’s fulfillment centers and where your products are stored at all times.
“Our old 3PL had 1,500 units of missing inventory that they couldn’t find. Because of a lack of ownership of the entire fulfillment stack, it’s been difficult to rectify, unlike with ShipBob who owns the entire stack: inventory and order management system, warehouse management system, and their fulfillment centers.”
Gerard Ecker, Founder & CEO of Ocean & Co.
4. Real-time data and reporting
It’s hard to find ways to improve logistics operations without access to accurate and real-time data. ShipBob provides a free data and analytics reporting tool that provides answers to questions related to fulfillment performance, shipping data, future demand forecasting needs, inventory allocation, and more.
With ShipBob’s tools, you can identify how quickly orders are being fulfilled and shipped, how much inventory you need to order (and when) to meet demand, and where to store inventory geographically based on where your customers are located.
“ShipBob’s analytics tool is really cool. It helps us a lot with planning inventory reorders, seeing when SKUs are going to run out, and we can even set up email notifications so that we’re alerted when a SKU has less than a certain quantity left.”
Oded Harth, CEO & Co-Founder of MDacne
How ShipBob has streamlined logistics operations for Prymal
Prymal is a Texas-based brand that offers sugar-free, all-natural creamers for coffee lovers. To help keep up with demand, founder Courtney Lee sought out the services of a 3PL company, but her first experience with a 3PL was underwhelming.
Courtney knew she had to switch 3PLs, so she approached several fulfillment providers and was impressed by ShipBob. Since she started with ShipBob in 2019, Prymal has grown by 4x and saves $8,000 a month on fulfillment.
“I felt like I couldn’t grow until I moved to ShipBob. Our old 3PL was slowing us down. Now I am encouraged to sell more with them. My CPA even said to me, ‘Thank God you switched to ShipBob.’”
Courtney Lee, founder of Prymal
Optimizing your company’s logistics operations can be difficult and resource-demanding. A reliable 3PL partner like ShipBob can help you optimize your supply chain and take order fulfillment off your plate. That way, you can focus more time and energy on growing your business, not on logistics operations.
To request pricing and to learn how ShipBob works, click the button below to get in touch with a fulfillment expert.
Logistics operations FAQs
Here are some common logistics operations questions that ecommerce business owners often ask.
What is logistics operations?
How to improve logistics operations?
What is logistics operations management?
Logistics operations management refers to the oversight of the entire logistics operations process, from managing supplier relationships, to inventory management, to shipping orders to customers.
What is a logistics operations manager?
Logistics operations managers head up distribution centers and oversee shipping operations and order fulfillment. This involves making sure that the right products are delivered to end customers quickly and affordably.