What is Integrated Logistics and How Does it Work?

6/22/2023

What is Integrated Logistics and How Does it Work?

Coordination is probably the most critical factor in supply chain management that can help businesses improve their bottom line in several ways.

Linking different activities can help businesses build an agile supply chain that seamlessly streamlines processes and information.

So the question is, how do you remove silos and create a collaborative process? 

Through an integrated logistics model.

What is Integrated Logistics?

Integrated logistics is a part of logistics management where all departments work in coordination. It involves integrating different activities of the supply chain to improve order fulfilment, delivery, and the overall customer experience. The motive of integrated logistics is to establish an efficient flow of operations. 

How does Integrated Logistics Work?

1. Procurement

Procurement deals with processes like material handling, purchase planning, and inbound logistics. But the role of integrated logistics is to ensure the optimisation of all these activities with real-time inventory management. To fulfil your integrated logistics objectives in procurement, you need to invest in technology and resources to enhance visibility. 

This process also strives to improve production forecasting. It ensures that you have the exact stock that is needed and the supply chain isn’t disrupted in case of shortages or surpluses. The raw materials and finished goods are procured after careful analysis of the forecasted demand and expected production lead times.

2. Distribution

Integrated logistics facilitates companies to streamline their order processing and distribution activities. Since there’s higher visibility with the procurement department and access to real-time data, warehouses know how to distribute products strategically to retail partners and distribution centres. 

Warehouses can better understand the locations in which certain products are in high demand and how many SKUs they need to keep at a particular time. The warehouses and distribution centres also communicate with stakeholders, automate fulfilment processes, and leverage technology to order accuracy and fast distribution.

3. Fulfilment

The fulfilment process starts as soon as the orders are placed. Integrated logistics make it possible for every distribution centre, rented warehouse or fulfilment centre to get notified. The orders are automatically processed and the facility that is closest to the order’s destination is prompted to fulfil the delivery. 

Integrated logistics involves using advanced warehousing technology to speed up the fulfilment process with the highest accuracy and efficiency.

4. Shipping

Finally, integrated logistics streamline the shipping process by choosing the right delivery routes, the best carriers, and the auto-generation of shipping labels. It helps shipping companies choose carriers based on correct rates and destinations so that the products are delivered faster. 

Integrated logistics manages numerous touchpoints in shipping such as product handling, payments, scheduling, custom clearance and reverse logistics. Shipping companies also leverage tracking systems to ensure customers have full visibility as to where their products are and when they will be delivered.

Components of integrated logistics

How can Integrated Logistics Help your Business?

1. Enhanced Speed

The whole point of integrated logistics is to increase agility across supply chain activities. The improved visibility and connectivity across logistics functions promote speedy procurement, order fulfilment, and deliveries. For example, warehouses know beforehand how many orders they have to store, and how many they have to deliver based on inputs from the procurement department. 

Similarly, shipping companies can quickly respond to customer queries relating to order status and delivery timing as they’re in touch with them through different tools. Since integrated logistics complies with all processes to work together, every department has a better ability to respond to unexpected changes and delays.

2. Better Supply Chain Collaboration and Visibility

Integrated logistics encourages supply chain departments to collaborate and work together, preventing information silos in doing so. A lack of visibility makes it difficult for companies to react to disruptions and hindrances in procurement, storage, deliveries, or any other functions. 

Aligning and integrating the entire supply chain, you can have your teams cross-communicate and share information about potential challenges in inventory storage, warehouse management, and shipping. 

Real-time visibility also makes it easy to deal with multi-channel logistics as all channels use the same inventory. This makes it essential to have accurate stock levels so you don’t oversell on channels that sell much.

3. Higher Chances of Meeting Customer Demands

Customer satisfaction is attributed to various factors. And a significant amount of those are related to logistics. Logistics companies need to anticipate the needs and expectations without asking the customers. 

Integrated logistics practices ensure that the influx of data circulating across multiple channels is consolidated under a single platform and leveraged to meet customer needs.

4. Reduced Operational Cost

Many logistics companies face the challenge of increasing operational costs in logistics. Integrated logistics help firms reduce costs in multiple logistical touchpoints. 

Since there’s greater visibility and all the processes work together, it’s easier to track where there’s a greater flow of cash and wastage. Firms can track inefficiencies and create a higher chance to save across the supply chain. This results in a greater profit margin and reduced costs. 

5. Reduced Waste

A high amount of waste has always been a big concern for logistics companies. Not only does it increase the cost but also isn’t environmentally feasible. Since the foundation of integrated logistics is on optimisation of time and resources, it sure helps companies reduce unnecessary wastage and save costs. 

Integrated logistics enables predicting the needs of customers and purchasing the right amount of raw materials, and ensuring on-time product delivery. It helps businesses balance inventory to avoid surplus inventory and match customer expectations at the same time. 

Wrapping Up

Integrated logistics is the future of modern supply chain management. The movement, storage, and delivery of goods have significantly transformed thanks to the latest technological advances and the need for sustainable scalability. The process has become interactive owing to interdepartmental collaboration. 

For new eCommerce and small businesses, integrated logistics will open new avenues for growth and collaborative work. 

If you’re looking to scale your logistics and adopt an integrated supply chain, you can contact us at PACK & SEND and we’d be happy to assist you. We have the expertise to help you meet customer demands and keep your logistics costs as low as possible.

Image Source: Supplychainopz

 

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