What is integrated logistics, and how can your business get it?
According to business experts, by 2023, 74% of transportation tasks will be done by someone else. In light of this, it is now necessary for companies to have effective integrated operations that can make the supply chain run smoothly, no matter how many providers are involved.
Even though businesses have been outsourcing logistics services for years, it’s still hard to keep the supply chain running smoothly, especially since customers expect fast shipping and packages the same day. There is a lot to learn about integrated logistics in this piece, and it will show you how to build a strong integrated logistics process for your business.
What Does Integrated Logistics Mean?
Businesses, companies, and small and medium-sized businesses are building partner ecosystems more and more. 95% of Microsoft’s business income comes from their 400,000 partners.
Partner communities like these offer third-party or even “white-label” services that work behind the scenes of businesses. This lets your brand focus on making its go-to-market offers and building stronger relationships with customers.
Businesses should have a great combined logistics management process to keep their partner ecosystems in good shape.
All of a company’s supply chain parts work together with integrated logistics, which is a way for organizing the whole chain. It means that departments, resources, and technology work together smoothly to improve business efficiency and meet customer needs.
Important Parts Of Integrated Logistics
It’s not enough to just connect your logistics companies for integrated logistics to work. To understand integrated logistics, you need to know what its main parts are:
1. How to Run Transportation
In shipping, fuel is the first big cost that comes up. More than 50–70% of the cost of operations, whether by air, road, or sea, goes to fuel. To keep logistics costs low generally, it’s important to understand and manage this important cost factor well.
Managing transportation is a key part of integrated operations. It includes planning, carrying out, and keeping an eye on all of the supply chain’s transportation operations. You should properly incorporate a Transportation Management System (TMS) into your logistics process so that you can pick the best way of transportation, find the quickest routes, and keep real-time track of shipments.
2. Keeping and distributing goods
Recent polls show that 34% of businesses have trouble getting the goods they need because shipments are late. This can cost them about 45% of their annual profits before interest and taxes.
Businesses can get the most out of their warehouse area by using an integrated framework to improve inventory. It makes it easier to fulfil orders and send them, which leads to a more efficient distribution process.
3. Taking care of inventory
Integrated logistics focuses on making the best use of product levels all along the supply chain, but that’s not its main goal. Studies show that businesses that use real-time data and advanced inventory methods have up to a 20% lower rate of stock outs, which makes customers happier.
Logistics cost analysis studies say that this strategy not only cuts carrying costs by about 15%, but it also makes sure that the right amount of inventory is kept on hand so that customers can be served quickly and easily. Companies can gain a competitive edge and improve operational efficiency by integrating integrated logistics concepts into their inventory management.
4. Taking Care Of Orders
Order processing includes getting customer items, taking care of them, and sending them out. Order turnaround times can be cut by up to 30% when order handling is streamlined and closely coordinated with other supply chain functions in an integrated logistics system.
Along with speed, precision is also very important. The accuracy rate of a good integrated logistics system should be between 96 and 98%. This means that the supply chain framework is working well.
5. Technology for information
Businesses can make it easier for third-party sources to share data and information by buying advanced IT systems like Enterprise Resource Planning (ERP) software, Transportation Management Systems (TMS), and Warehouse Management Systems (WMS).
These tools make it easier for people to talk to each other and work together, which lets businesses make decisions based on data. Forbes says that Amazon’s retail success is due in large part to its transport networks and cutting-edge logistics technology. We all know that the business has a great e Commerce transportation system.
Why building integrated logistics is a good idea
86% of 3PL providers said that their clients raised the amount of outsourced logistics services they used because they saw the benefits. Here are some of the benefits that companies that run an integrated transportation system well get:
Cutting costs
When there is better visibility and cooperation, inefficiencies can be found and fixed, which lowers the cost of logistics. To see how this works, let’s look at Deere & Company, which is known for making machines that use integrated operations to cut costs by a large amount.
The company redesigned its supply chain network because of problems caused by having a wide range of products and changing shopping activity with the seasons. Adding “merge centers,” improving cross-dock terminals, and carefully grouping shipments were some of the things that were needed to do this. The results were amazing: the amount of inventory dropped by $1 billion, the time it took to send to customers dropped from ten days to five, and the cost of transportation went down by about five percent per year.
The example of Deere & Company shows how powerful combined logistics can be in lowering costs and improving operations.
Being flexible and working well
Overall performance goes up when the supply chain is more flexible and teams work together more. The services that DHL has provided to well-known telecom companies in Brazil and Africa have shown that their combined logistics solutions work.
DHL took care of all the arrangements for the telecom company’s return and repair, which gave them more control over their workers and allowed them to do cosmetic repairs on-site. The results were impressive: they added 30% more workers to keep up with changing needs, cut turnaround time from 1.5 months to 3–5 days, and improved their screening and testing skills so they could handle 98,000 units per month.
This unified method not only made things easier, but it also helped fix problems faster, saved money on supplies, and sped up the release of new products to the market. This shows how integrated logistics can help a business grow in the long term.
Customer Happiness
Improving overall customer happiness means meeting customer needs quickly and accurately by streamlining processes and getting accurate data. The partnership between CEVA Integrated Logistics and a major multinational telecommunications business is a great example of this benefit.
CEVA solved the problem by making it easier to return and fix mobile devices. Their goal was to increase the Net Promoter Score (NPS), which is a key measure of customer happiness. As part of the strategic relationship, all returns and repairs were fully supported. This included services like sorting, grading, accredited repairs, refurbishments, exchanges, and refunds.
Adding contact centre services made it possible to fix device problems remotely, which cut down on the need for actual repairs and made sure that users could always connect. The successful partnership with CEVA made a big difference in the higher NPS scores, showing that integrated operations can improve the customer experience.
How Competitive the Market Is
A well-executed integrated logistics plan is one of the most important things a business can do to become more competitive in the market. Amazon’s incredible rise to fame is a powerful example of this concept in action.
In its 2021 first-quarter numbers, Amazon showed how much it cares about vertical integration as a logistics company. The company said that expenditures on logistics-related activities had grown by 80%, including buying new warehouses, cars, planes, and trucks. The goal of Amazon is to become its own end-to-end logistics operator. This would be a big change for the business.
Long-Term Success
Integrated logistics helps environmentally friendly actions by finding the best paths for transportation, lowering pollution, and minimizing waste. The world’s biggest store, Walmart, has put in place an integrated fleet management strategy that aims to save money, be more environmentally friendly, and use resources more efficiently.
As part of the plan, electric, hybrid, and vehicles that use compressed natural gas (CNG) will be added to the fleet. This will cut greenhouse gas emissions by 30% compared to vehicles that use traditional fuels.
Walmart’s dedication not only helps the environment but also makes the company look better in the eyes of the public, making it a responsible leader in green fleet management. Because this approach has worked, costs have gone down, making alternative fuels a good choice for both the economy and the environment.
Five steps you need to take to build integrated logistics solutions for your business.
Are you ready to use an integrated transportation management system? These are the first things you should do:
1. An in-depth supply chain analysis should be done.
One of the most important steps in creating integrated logistics solutions for businesses is to do a full supply chain study. This methodical approach includes setting the goals and scope of the analysis, gathering data from different parts of the supply chain, mapping the whole chain, identifying stakeholders, evaluating risks and opportunities, comparing performance, doing a SWOT analysis, involving cross-functional teams, and writing down the results.
By taking these steps, companies learn important things about how they run their current operations, which sets them up for making a good integrated logistics plan.
2. Plan: List the three most important performance criteria for your integrated logistics system.
Find the key performance indicators (KPIs) that are most important to the goals you have for your business. Set a clear goal for adopting an integrated logistic solution, whether it’s to cut down on lead times, make sure orders are correct, or avoid running out of stock as much as possible.
Each company has its own business goals, but here are some of the most popular KPIs for integrated logistics frameworks in each one:
To sell:
Last-mile package delivery on time
Best rate of product turnover,
Accuracy in order delivery.
Medical care:
Controlling the temperature in storage
On-time delivery and insight in real time
Strict compliance with regulations
Getting rid of risks
For business:
Traceability in the supply chain for quality control
How much each unit costs to transport
Effects on the environment
3. Put integrated logistics management pilot projects to the test.
Using small-scale pilot projects to test and improve combined logistics processes is an important step to make sure they work in the real world.
One case that stands out is Unilever’s logistics pilot project in Italy, where the company used PTV Route Optimiser software to make their operations more sustainable and efficient. Unilever, a global company that makes consumer goods, wanted to make its shipping needs more eco-friendly and effective. The business put in place PTV Route Optimiser, a tool for planning routes and schedules that is meant to improve distribution and transportation by taking many things into account, such as environmental issues like emissions.
The company got a lot of benefits from the test project’s success, such as a general simplification of logistics processes, lower costs, up to a 15% drop in CO2 emissions, better fleet utilization, and better customer service and punctuality.
4. Work together: Make deals with suppliers, distributors, and other important partners to work together.
In integrated transportation, working together is very important. For a more complete and effective supply chain, partners must work together with suppliers, distributors, and other players, in addition to their own efforts.
FedEx and Dell Technologies’ relationship is a great example. Together with Switch, they are the first to offer exascale multi-cloud edge infrastructure services. By strategically placing technology hubs across the United States in secure FedEx facilities, this collaboration aims to bring computing, storage, and connectivity to the network edge, breaking down performance barriers for apps that are sensitive to latency.
This kind of cooperation shows that logistics relationships can even help a company like Dell with its efforts to go to market.
5. Delegate: Think about working with professionals in integrated logistics
It is smart to get help from integrated logistics professionals or third-party logistics (3PL) providers when you are trying to combine logistics processes. Their many years of experience and specialized knowledge can speed up the merging process and make it a lot more successful overall.
Take the case where you already have established providers for trucking, delivery, and storage. In this case, picking transportation software like Far Eye can be a big step forward. Far Eye’s delivery management software makes things run more smoothly by finding the best paths, making sure deliveries happen on time, and cutting down on the number of kilometres driven. The features in Far Eye, such as constraint-driven routing, real-time visibility, and performance tracking, make delivery processes more efficient.
Why ArrivedEZ can be a good partner for integrated logistics
It’s important to include a top 3PL company like ArrivedEZ in your supply chain when you use integrated logistics.
ArrivedEZ’s solutions are designed to make the supply chain more efficient and improve customer happiness. They are powered by expertise, cutting-edge technology, and a global fulfilment network. ArrivedEZ is known for having the fastest, most reliable, and safest same-day services in the business. These services include direct-to-store sales.
ArrivedEZ’s best feature is that it can be used in a wide range of businesses, such as retail, healthcare, and manufacturing. The company’s specialized supply chain optimization, cost-effective strategies, and customer service that’s available 24/7 show how dedicated it is to providing individual logistics support. Businesses that choose ArrivedEZ as a strategic partner get a reliable partner that is committed to keeping operations running smoothly. This lets them focus on their main tasks knowing that their orders are being handled by experts.
Last Thought
Integrated logistics isn’t just a trendy term; it’s a way of thinking that can completely change the way your business handles its supplies. Your business can do well in today’s fast-paced business world if you understand its parts, see its benefits, and follow a well-thought-out plan for action.
FAQ
What is a transportation management system that is fully integrated?
All of a company’s supply chain parts work together with integrated logistics, which is a way for organizing the whole chain. It means that departments, resources, and technology work together smoothly to improve business efficiency and meet customer needs.
What are the most important parts of transportation that work together?
Transportation management, storage and distribution, inventory, order handling, and information technology are some of the most important parts of integrated logistics. All of these parts work together to make the supply chain more efficient and streamline processes.
Why is it a good idea to build combined logistics?
Businesses that successfully use integrated logistics enjoy a number of benefits, such as lower costs, more freedom and efficiency, happier customers, higher market competitiveness, and a commitment to sustainability. These perks help the business grow and be successful as a whole.
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