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What Is Logistics Planning? Strategies To Save Money And Time

What Is Logistics Planning? Strategies To Save Money And Time

Imagine a skin care company that sources the finest active ingredients from suppliers around the world and then transforms them into potent formulations. The finished products, elegantly packaged in branded glass jars, go to regional centers, where they’re readied to make their way to customers’ doorsteps. Behold the power of effective logistics planning—ensuring that every element of your supply chain operates without a hitch, from start to finish.

Learn more about what great logistics planning looks like, and the benefits and strategies you can use to reduce costs and be more agile.

What is logistics planning?

Logistics planning is the coordination and management of goods from suppliers to end users, including raw material acquisition, manufacturing, transportation, warehousing, and delivery strategies. This involves synchronizing all supply chain elements to ensure smooth business operations from the point of origin to the point of consumption.

Businesses use logistics planning software like Magaya and Shopify order management to improve visibility, automate processes, anticipate problems, and find solutions that allow them to move efficiently through each phase. 

Benefits of logistics planning

Logistics planning can optimize every aspect of your supply chain. Here are five primary benefits:

Reduces operational expenses

Logistics planning enables you to reduce supply chain costs through efficiency. For example, logistics software optimizes routes and consolidates shipments for lower transportation costs, and improves inventory management techniques to reduce holding and warehousing expenses.

Refining these logistical elements can help minimize supply chain disruptions, improve operational efficiency, and allocate resources more effectively.

Accurate demand forecasting

Accurately forecast demand with strategic logistics planning techniques such as data-driven predictive analytics. Demand forecasting helps align inventory with actual market needs, reducing overstock and stockouts. It can also boost customer satisfaction by helping you consistently meet demand.

Responsiveness to market changes

With advanced supply chain management tools and agile logistics, like cross-docking and just-in-time (JIT) inventory, your business can swiftly adapt to market changes. For instance, a furniture manufacturer detecting increased demand for home office setups can put in place measures to expedite its supply of desks and ergonomic chairs to retailers.

Better collaboration with supply chain partners

The logistics planning process fosters collaboration with supply chain partners. Sharing real-time data and aligning goals enables synchronized operations, ensuring integration across the supply chain. This enhanced cooperation prevents delays and reduces errors in order fulfillment.

Faster delivery times for customers

Effective supply chain management leverages predictive analytics and real-time tracking to accelerate customer delivery times. A logistics manager uses these tools to anticipate demand surges, strategically adjust inventory, and choose the fastest shipping routes. This approach minimizes transit times and expedites order fulfillment.

7 tips for effective logistics planning in ecommerce

  1. Implement data-driven demand forecasting
  2. Communicate with key suppliers
  3. Use real-time inventory management systems
  4. Optimize warehouse layout and operations
  5. Automate order processing and fulfillment
  6. Partner with reliable shipping carriers
  7. Develop a robust reverse logistics process

Effective logistics planning helps ecommerce businesses to ensure timely deliveries and maintain customer satisfaction. Here are seven tips to improve your logistics:

1. Implement data-driven demand forecasting

Collect historical sales data, market trends, and seasonality factors to create a comprehensive dataset. Use advanced analytics tools with machine learning algorithms, like SAP Integrated Business Planning, Oracle Demand Management, and Kinaxis RapidResponse, to predict customer demand more accurately.

Integrate these forecasts into your logistics plan to adjust inventory levels, optimize procurement schedules, and align your supply chain operations to meet anticipated demand fluctuations. For instance, if you notice a spike in sales every summer, increase inventory and expedite shipping in preparation for the surge in orders.

2. Communicate with key suppliers

Regularly communicate your needs and expectations to key suppliers to build transparency and mutual understanding. Develop long-term contracts and collaboration agreements as part of your strategic logistics plan to foster trust and reliability.

If your ecommerce business plans to launch a new product line, close collaboration with suppliers can ensure timely availability of materials and components, preventing product rollout delays.

3. Use real-time inventory management systems

Implement real-time inventory management systems that integrate with popular ecommerce platforms like Shopify. Tools like Stocky and ShipHero provide up-to-date inventory levels, helping you meet customer demand and avoid stockouts and overstock situations. Real-time data allows you to quickly respond to changes and maintain stock levels that align with customer expectations.

Manage all your inventory from Shopify

Shopify comes with built-in tools to help manage warehouse and store inventory in one place. Track sales, forecast demand, set low stock alerts, create purchase orders, count inventory, and more.

Explore inventory management on Shopify

4. Optimize warehouse layout and operations

Design efficient storage systems with clear pathways to improve the picking process. Streamlined operations and organized layouts reduce handling time and errors, resulting in faster order fulfillment and greater efficiency.

Employ radio-frequency identification (RFID) technology, which uses radio waves to automatically identify and track tagged inventory items, to reduce manual errors. Implement warehouse management systems (WMS) to manage inventory and improve supply chain visibility, ensuring accurate tracking and easy access.

5. Automate order processing and fulfillment

Use integrated software solutions, like order management systems (OMS) and WMS, for order tracking, inventory management, and shipping. Incorporate robotics, like automated guided vehicles (AGVs) and robotic picking systems, to speed up the picking and packing processes. These logistics strategies can reduce errors and decrease labor costs.

6. Partner with reliable shipping carriers

Select reliable shipping carriers to ensure your business can withstand supply chain disruptions. Choose partners that offer competitive costs and strong tracking capabilities with real-time updates for you and your customers. Establishing strong relationships with carriers can help mitigate delays and maintain consistent delivery performance.

7. Develop a robust reverse logistics process

Establish an efficient reverse logistics process to manage returns. Set up an online portal where customers can initiate returns. Implement barcode scanning and automated sorting at return centers to quickly categorize and assess returned items. This lets you manage inventory by identifying products for restocking, refurbishment, or disposal.

Analyze return data to identify patterns and causes. Use this information to improve product quality and reduce future return rates.

Logistics planning FAQ

What is an example of logistical planning?

An example of logistical planning is a retail company using software to optimize delivery routes based on real-time traffic data to ensure the fastest shipping times.

What does a logistics planner do?

A logistics planner coordinates the movement of goods and materials within a supply chain, managing tasks such as transportation, warehousing, and inventory control to improve efficiency and reduce costs.

How do you plan a logistics strategy?

To plan a logistics strategy, assess your supply chain’s current performance, identify areas for improvement, and integrate technology to improve efficiency, all while aligning with the overall business goals.

This article originally appeared on Shopify and is available here for further discovery.
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