With the current boom in the e-commerce sector, there has been a parallel advancement in its supporting sectors as well, including logistics management, which is a pillar in supply chain management. This advancement is necessary, to accommodate the changing business models of the e-commerce industry. Gone are the days when logistics are simply viewed as storage houses for goods, as the entire logistics management has taken a rather holistic approach in preparing the goods for storage, accumulate them and sort them, before packing and shipping it to the customer.
The importance of logistics warehouse cannot be undermined, as it provides significant value addition, both in terms of economy and service delivery to the customer. It plays a crucial role in cutting down the delivery costs to both the company and the consumer, as items can be delivered to a central warehouse, which is strategically located, based on the areas of operation of the business, instead of shipping individual items to the customer.
Logistics warehouse can also serve as inventory of goods to create a proper balance between demand and supply. Storing goods is no easy task, in any way, as suitable environment needs to be set up to store certain goods. For example, certain goods, especially foods and chemicals, might require a suitable temperature to retain their usefulness, while others, like large machines, might need a considerable storage space. A warehouse is well equipped to handle these specific requirements and hence, provides long term economic viability to the manufacturer.
The advent and popularity of e-commerce meant that sellers now do not have a physical location and operate completely online. While smaller players in the e-commerce universe, who operate in limited locations, can have their storage facilities, the larger ones would need elaborate warehouse operations and logistics management, distributed geographically, throughout the areas of operation, in order reduce shipping and delivery time of the goods. With a plethora of goods being sold every day, the pressing need to track the current location of goods has brought the involvement of technology in tracking the current position of the good in the logistics cycle. So every movement of goods, whether in stage of shipping or being received at a sort facility need to be updated in the tracking system, and is even updated to the customer. Moreover, many products are returned to the store facility, either by the customer or due to failure in receipt, which incurs additional logistics cost. This is one aspect that the new age supply chain management must focus on, and create a right balance between customer satisfaction and storage and distribution costs.
With constantly changing business demands, logistics management must be flexible and manage the inventory effectively, to optimize costs and meet both manufacturer and customer expectations.