All of the following activities play a role in how effectively goods are moved to the customer.

They are as follows:

1. Customer service
2. Order processing
3. Distribution
4. Inventory control
5. Demand forecasting
6. Transportation
7. Warehousing
8. Warehouse site selection
9. Material handling
10. Procurement
11. Parts and service support
12. Packaging
13. Waste disposal
14. Return goods handling

Let us look at each one briefly:

Customer Service

Each one of the company’s logistics activities can affect customer satisfaction.  If one of these activities fails customer satisfaction cannot be guaranteed.

For example, Zolani can have the required 10 tables for his customer ready and waiting, but if his transport mode fails, he will not be able to deliver to the customer. This will lead to poor service levels and the customer will not be satisfied.

Logistics strives to achieve high customer service and satisfaction, which has a direct impact on the profitability of the company.  A happy customer will order goods again, a dissatisfied customer will think twice before using the company to order his goods if he has been let down in the past.

Order processing

As soon as an order is received various departments will spring into action so that the order can be fulfilled and delivered to the customer on time.

Think of it as the gun that signals the beginning of a race. The runners are frozen until the gun goes off and then they spring into action

There are three elements in order processing. They are as follows:

• Operational elements – this includes order entry, scheduling, order shipping, and invoicing.
• Communication elements – this includes order status inquiries, expediting, error correction, and product information requests.
• Credit and collection elements – this includes credit checking and accounts receivable and processing

Customers expect their orders to be entered quickly and correctly. This has a large impact on customer service levels.

Distribution communications

Good communication is very important to the success of a company. Each department needs to communicate the needs of the customer correctly to make sure that the customer’s needs are met.

For example, order processing will communicate with production. Production will communicate with warehousing.  Warehousing will communicate with transport.

Without communication, the logistics system will break down. This communication can be done both verbally and via computer systems.

Inventory Control

Remember inventory costs money.  Thus this is an important logistics activity. Without the correct inventory levels, we will not be able to meet the needs of the customer.

Money is tied up in inventory until the goods are sold.  Any loss in inventory will impact directly on our profit.

Carrying inventory costs money, the company cannot make this money back until the goods are sold.

Demand Forecasting

This is looking at the number of goods that customers will want in the future.

This is important information that is needed by marketing, manufacturing, and logistics.

Marketing will need to look at advertising and pricing. Manufacturing will need to know exactly what production schedules will need to be set up or changed and the number of raw materials that will be needed.  Logistics will need to know how much warehousing space, packaging, transportation, etc will be needed.

It is very difficult to allocate resources like staff and equipment to the logistics activities if you do not have some idea of the amount of product that you will be moving or storing.

Transportation

This involves choosing the best transport mode at the best price. Remember goods need to be moved from the point-of-origin to the point of consumption.  This will also involve looking at government restrictions on weight. As well as, the most cost-effective and quickest route for the products to take to the customer.

Transport is one of the largest logistics costs, therefore it needs to be managed correctly so that does not take away too much of our profit.

Remember companies with high profits can provide better wages, working conditions, job opportunities, and training for their staff.

Companies with low profits cannot look at bettering their staff as they will simply not have enough money.

Warehousing and storage

Products need to be stored at the plant or in key positions in the distribution center.  Here we look at the amount of space needed to store goods.  It also includes decisions about whether to buy or lease warehouses, the layout, and design that best suits the company’s products, and the safety of staff.

Plant and warehouse selection

This involves looking at where the firm's customers are located and placing the firm's warehouses in the best possible place. This is also concerned with the location of inputs such as raw materials that the firm needs to make their products.

For example, A family that decides to move to a new house or area must look at where their children go to school and where they work.  This will ensure that they can get to work on time and that their children get to school on time (transportation).  This will help them to save on taxi fares and petrol (costs).  Another factor to take into account is how far they are from shops where they can buy the food and supplies needed by their family (raw materials).

From this example, we can see that we use logistics in our everyday lives. 

Material Handling

This is concerned with the movement of all the companies’ products. It includes the movement of raw materials, in-process inventory, and finished goods.

Let us look at what material handling aims to achieve.

• Elimination of handling where ever possible – this will increase the safety of the workers.
•  Minimize travel distance – this will make our processes much faster
•  Minimize bottlenecks – as we know bottlenecks will cause a delay in delivering the goods to the customer.
•  Minimize losses due to damage and theft – remember inventory is money and can only be sold if it is in good condition and if it is there to sell

Every time goods are handled it costs the company. Thus it must be kept to a minimum

Material handling allows us to increase customer satisfaction by minimizing production delays and safely moving goods.

Procurement

This deals with getting the right raw material and services that a company needs. It looks at selecting the best suppliers of raw materials, the timing of these raw materials (when we need them), and the quality of the raw materials.

Remember GIGO, Garbage in Garbage out.  Our products will only be of high quality if our raw materials are of high quality.

Parts and service support

Our responsibility does not end when the customer purchases our products.  Logistics also looks at servicing goods once they have left the company.  This will increase our customer service levels.

It involves providing spare parts if the product should break down.  As well as, servicing the goods if they should not work properly.

For example, is if you buy a car.  The car dealership must keep all the spares that you might need if something should go wrong.

If your product is part of a customer’s manufacturing processes it could a major problem if they cannot have a part quickly.  It will cause downtime in their processes and the customer will lose faith in the company.  They will think twice before purchasing goods from the company again.

This logistic activity makes sure that all spares are available when and where the customer needs them.  

Packaging

Packaging performs two functions. They are marketing and logistics.

Firstly the logistics function allows the product to be contained and protected so that it does not get damaged or deteriorate in any way. It also allows the product to be stored and moved easily. In this way, it will reduce handling and therefore the cost to the company. Remember handling is a cost to the company. Therefore the less handling the better. When products get handled too much it will increase the chance of them getting damaged.

For example: imagine having to handle hundreds of screws if they are not boxed and packaged correctly.  This would be an impossible task.

Secondly, packaging acts as a form of advertising. The instructions printed on the packaging allow the customer to use the goods properly. Its size, weight, and colour allow it to stand out from all other products so that customer is attracted to it.

For example: if you only use a certain brand of dishwashing liquid, you will be able to identify it on a shelve with several other products, just by its colour and shape.

Salvage and waste disposal

All waste must be either re-used in another aspect of the company’s manufacturing processes or must be disposed of. 

The logistics processes must see to it that waste is transported, handled, and stored correctly.

If the waste is reusable logistics must ensure that it is transported to the correct place where it is to be preprocessed.

For example, many companies have paper bins where all scrap paper is kept. Once the bins are full the bins are removed by a recycling company.

Return goods handling

This deals with products that are returned to the company.  For this reason, it is often called reverse logistics.

Goods can be returned because they are faulty or it may well be that we supplied the customer with the wrong product. 

Logistics will move these goods back to the warehouse or back to manufacturing where they need to be reprocessed.

This is a very important logistics activity as it involves customer service.  If it is not handled correctly the customer will be very unhappy.  As we have seen, unhappy customers will think twice about buying from us again.  Remember we want happy customers as this means higher profit for the company.

As we can see all these logistics activities need to work together in order to satisfy the client. If one of them should fail it will affect the next activity.