Logistics Management Guide

Ordering, storing, and tracking inventory. Processing orders. Picking, packing, and shipping orders.

There is a lot that goes into logistics operations, and managing it all is a tremendous undertaking.

Logistics management is an ongoing process where you need to continuously optimize the supply chain to save on costs and meet customer expectations.

In this article, you will learn how the importance of logistics management, and the ways you can better manage your commerce supply chain.

So, what do you want to learn?

• What is logistics management?
• Why is logistics management important for your supply chain?
• Types of logistics management
• 3 stages of logistics management you need to know
• Logistics management best practices
• Streamline logistics management with ShipBob
• Logistics management FAQs

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What is logistics management?

Logistics management refers to the planning and managing of  inbound and outbound logistics, as well as reverse logistics — the three major areas that make up the ecommerce supply chain. 

Managing logistics involves:

• Ordering, receiving, and storing inventory across distribution centers
• Tracking inventory as it moves through the supply chain
• Implementing technology and automation
• Building warehouse picking and packing workflows
• Ensuring orders are shipped safely and on time

Why is logistics management important for your supply chain?

Logistics management refers to overseeing the entire ecommerce supply chain, starting with supplying finished goods to shipping orders to their final destination.

The goal of logistics management is to meet customer expectations around accurate and fast delivery while optimizing internal costs.

If you’re ready to grow your ecommerce business, here are three reasons why logistics management is important.

1. Delivers products accurately

In today’s ultra-competitive ecommerce industry, most direct-to-consumer (DTC) brands seek to achieve as close to 100% order accuracy rate as possible. Though 100% isn’t always possible, a good accuracy rate falls between 96-98%. Any rate under 95% means there is room for improvement. 

Logistics management requires setting accuracy goals, improving internal workflows, and finding ways to automate processes to optimize costs and reduce human error.  

2. Keeps logistic costs low

Poor logistics management increases logistics costs, including storage and fulfillment costs, which can impact your bottom line. 

Some of the ways to logistics management helps to keep logistics costs low include:

• Reducing sourcing costs by finding suppliers closer to your warehouse or store
• Keeping storage and purchase costs low by choosing to only stock products that are performing well
• Constantly optimizing your logistics processes to keep up with any changes in the supply chain
• Reducing shipping costs by storing the items in locations where there is the most demand 
• Outsourcing logistics to a 3PL to save money in the long run

With the right resources and technology, logistics management has the potential to provide insights into your operations, so you can identify areas of improvement to save on costs.

For instance, by tracking inventory in real time throughout the supply chain, you can collect historical logistics data needed to know when to reorder more inventory. That way, you have a better sense of how much inventory you need and when, which can help to avoid stockouts or overstocking, both of which increase costs.

3. Boost customer satisfaction

If an order is delivered with the wrong items, it ruins the unboxing experience. If a customer’s order is delayed, it impacts the shipping experience.

Logistics management plays a big role on customer expectations. The post-purchase journey relies on an efficient supply chain.

Without proper logistics management, it will not only be difficult to optimize operations and keep costs low, but it will also be a challenge to meet customer expectations around speed, accuracy, and affordability.

When managed right, ecommerce logistics can help you build customer loyalty and a positive brand reputation. 

Types of logistics management

To fully understand logistics management, you should have a good understanding of the different areas involved and how they differ from one another. Below, we outline the most common examples or types of logistics management. 

Supply chain management

Managing the supply chain is one piece of logistics management. This process refers to the overarching flow of goods and what’s required to get something to an end customer. 

Production logistics

Manufacturing, production, and sourcing are the first point in the overall logistics management process. This is where your products are developed or created from raw materials and transformed into finished goods. 

Some brands opt for local or domestic manufacturing hubs to keep their logisitcs management strategy more local and controlled, but the majority utilize factories in China and other counties to keep costs low. But working with a manufacturer to ensure your needs are met and product quality is maintained is critical for any company that sells physical goods. 

Transport & distribution management

Transportation is the part of the logistics management process that keeps things (literally) moving. Shipping and distributing your inventory — via rail, sea, truck, plane, or other delivery modes — helps get products from Point A to Point B. 

There are different times throughout the supply chain when inventory needs to be physically shipped, such as coming from the manufacturer to the distribution center, or being shipped from a warehouse to a brick-and-mortar store or residential customer address). In ecommerce, shorter transit times are associated with higher customer satisfaction, making transportation and delivery a priority of most competitive brands. 

Returns policies & logistics

Returns or reverse logistics is an optional piece of the overall logistics puzzle, whereby some products may get sent back by a customer. There are cases where despite returns being unallowed, a package can still be returned to sender due to deliverability. 

Returns vary based on the complexity of the items and policies, ranging from unused items simply going back onto shelves or in inventory bins to become available for the next customer, to items being more closely evaluated with several touchpoint required for them to become sellabel again (e.g., electronics getting refurbished or plugged in to confirm they still work, to apparel being ironed and rebagged/tagged).

3 stages of logistics management you need to know

Though there are several steps that make up the entire supply chain, there are three major stages of logistics management that are the most important to focus on.

Here is an overview of the three major stages of logistics management.

Procurement

There won’t be any ecommerce inventory to sell if you don’t source it. The first step is sourcing and finding the right suppliers and manufacturers for finished goods. Quality and reliability, production lead times, and costs are all factors to consider during the procurement process. 

Finding and signing on the right suppliers requires time, the ability to negotiate terms, and ensuring that the goods are of the quality you expect.

You will also have to keep track of how long it takes to receive inventory, so can make sure you have the right amount of inventory needed at all times.

After you sign on your supplier(s), here are points of evaluation to keep in mind:

• What are their key performance indicators and metrics?
• Are they meeting service-level agreements (SLAs)?
• Is the product quality up to your standards?
• Are they improving or at least consistent over time?

Storage

Once the goods are sourced from the supplier, inventory needs to be received and stored properly.

You have the option to store inventory at home (for in-house fulfillment), in a rented warehouse, or in a 3PL’s fulfillment center(s). But no matter where you store your inventory, it needs to be stored in a way that optimizes space and works with your fulfillment workflow. 

The right inventory storage system can help you save on holdings costs, speed up your picking and packing process, and make inventory management much easier, especially if you need to conduct an inventory audit. 

Order fulfillment

Fulfillment logistics is arguably one of the most critical pieces of the supply chain. It involves order processing, picking and packing workflows, and shipping. 

During the order fulfillment process, you have to determine how you will fulfill your orders to meet customer expectations. Not only is speed a priority but so is order accuracy. You will also have to consider shipping costs and the different ecommerce shipping options you can offer customers. 

Having the retail fulfillment infrastructure and technology in place can help you better manage logistics. For instance, automatically processing orders that are placed on your online store can help verify order information, including the shipping address, before it is sent to your fulfillment team to pick, pack, and ship. 

Investing in automation tools and systems can be costly, but it doesn’t mean there isn’t a solution. If your business is at a stage when you can’t keep up with your current order volume, the best option is outsource fulfillment to third-party logistics company like ShipBob.

At this point, you might be thinking that outsourcing comes with a high costs. But in truth, you can delegate ecommerce fulfillment to a logistics partner, so you can focus on tasks that directly drive revenue. Since you won’t be focused on managing logistics, you can focus more time and money on growing your business.

“We see outsourcing fulfillment as a cost-savings and believe it will save you money in the long run. 3PLs negotiate rates, give you back all the time you’d spend stuffing mailers, and reduce the errors you’d make messing up addresses.

We looked into opening our own warehouses and hiring employees, but couldn’t come close with what 3PLs charge for picking, packing, and shipping.

We’d also be worried about scheduling fulfillment shifts, ordering boxes and shipping labels, and dealing with the extra headaches of running logistics.

Most of all, those are hours we’d spend on tasks that are not scaling our business when we could be using those resources for growth. You should spend time doing what you do best, and fulfillment is an easy task to take off your plate.

Plus, we really couldn’t do it ourselves. Our order volume has seen ebbs and flows, and ShipBob has fulfilled over 10,000 shipments per month for us, with Black Friday/Cyber Monday and our summer season being our most in demand times of the year.”

Gerard Ecker, Founder & CEO of Ocean & Co.

Logistics management best practices

Logistics management requires a lot of time and effort in supply chain planning. To help set you up for success and not get bogged down with the wrong tasks, below are the three primary best practices for logistics management in ecommerce.

Draw out a logistics management plan

Before you start implementing new logistics processes, it’s important that you line up your goals, KPIs, available resources, and the equipment and technology required to achieve these goals. Note: Make sure you integrate a lot of data-backed insights into optimizing and planning your logistics.

Think about how you will get the right suppliers on board, the ones who are dependable, have high-quality products and materials, optimize inventory, meet delivery timelines, and are able to efficiently get product to you. Then, strategize how you will track and optimize inventory. 

From there, you will need to find ways to improve fulfillment accuracy and speed, whether it’s through better and more efficient storage systems, or better picking and packing processes. 

Another thing to keep in mind is the carriers in your network. Look at the different rates and services between USPS vs UPS vs FedEx, for instance. The right mix of carriers based on the type of shipping options you offer can help save costs.

Also, keep in mind that there are plenty of regional parcel carriers that specialize in local last-mile delivery. You might need the minimum volume to work with them, otherwise you can outsource fulfillment and utilize the fulfillment company’s bulk rates and economies of scale. 

Location is also important. Many businesses start out by only shipping from one location (e.g., their home). But as your business grows, your customer reach will expand geographically. That’s the nature (and benefit) of ecommerce.

To reduce shipping costs and speed up transit times, you might want to consider splitting inventory across multiple locations to reduce shipping zones.

“We sell flammable goods that need to be shipped via ground, so ShipBob has been a great ally as they have fulfillment centers all over the US, facilitating a 2-3 day delivery time for any customer in the US. 

This is helpful especially when weather challenges happen; being able to have different locations to ship from allows for a more seamless supply chain.”

Andrea Lisbona, Founder & CEO of Touchland

Implement supply chain automation

Logistics and inventory automation can make your supply chain more efficient every step of the way, from order processing to automated shipping. 

For instance, repetitive warehousing operations can be made less arduous by harnessing warehouse automation technology. Think goods-to-person (GTP), pick-to-light (PLT), and voice picking systems. This frees up your staff’s time to focus on growing your sales.

With ShipBob’s automated fulfillment functionality, as soon as your customer places an order, it is automatically sent to one of our fulfillment centers and shipped from there to the customer. 

“My favorite aspect of ShipBob is how easy it is. The software is pretty intuitive, and everything is where you think it would be. The ease of access and automation has helped us sell on our store.” 

Josh Hollings, Founder & CEO of Drop FX

Use a warehouse management system

Implementing a warehouse management system (WMS) helps give you access to real-time data in a digestible format. A WMS streamlines logistics and provides full visibility into your entire supply chain, even as you expand into multiple warehouse locations to provide consistency throughout your logistics network. 

To have absolute control over warehouse management, you will need to find a way to connect your warehouse(s) with other tools such as inventory management software, an ERP inventory system, or inventory app. That way, you can aggregate data related to inventory forecasting, SKU velocity, inventory days on hand, and much more. 

If you outsource fulfillment, you can utilize a 3PL like ShipBob that provides all of these things to brands out of the box.

“ShipBob’s dashboard is super intuitive and easy to navigate. love that you can view orders based on when they are processing, completed, on hold, and in other stages. It is super helpful for us to have that and track the order every step of the way.

In terms of tracking inventory, we use ShipBob for everything — to be able to track each bottle of perfume, what we have left, and what we’ve shipped, while getting a lot more information on each order.”

Ines Guien, Vice President of Operations at Dossier

Continual supply chain optimization

Supply chain optimization can never be a one-off activity that’s then done. As competitiveness in the sector increases, every effort to optimize your supply chain equals an extra dollar saved and another happy customer, both of which deliver a high return on investment.

Continuously eliminating inefficiencies in your supply chain could mean enabling to have or utilize an extra warehouses close to where customers are, allocating inventory to storage locations depending on forecasted demand, or choosing to source inventory from a more cost-effective supplier. 

Streamline logistics management with ShipBob

Logistics management consists of several moving parts, which, as you grow, may make it a full-time (and time-consuming) effort.

ShipBob’s logistics solutions can help. From warehousing to international logistics expertise, ShipBob is a best-in-class 3PL that offers a robust logistics network of fulfillment centers, advanced technology, and digital logistics solutions that help you manage logistics systems while saving time and money. 

Our entire fulfillment network is powered by the same proprietary technology, which makes it easy for you to manage logistics performance from one dashboard. You can view inventory levels in real time, set automatic reorder points, filter orders by status, determine your ideal distribution strategy, and much more.

“Logistics is something you never think about until it stops working, and we’ve never come to that point with ShipBob. Everything just works. We are super happy with ShipBob and very impressed by how well they’ve pumped out our large volume of orders.”

Sergio Tache, CEO of Dossier

ShipBob’s full-stack, tech-enabled platform easily syncs with your online store. Once an order is placed, it is automatically sent to the closest fulfillment center and the fulfillment process begins right away. 

Outsource fulfillment to ShipBob and spend less time and money on logistics. Read this review to learn more about ShipBob’s logistics capabilities, or start a conversation with us today by clicking the button below.

Logistics management FAQs

Here are answers to commonly asked questions related to logistics management.