It is interesting to note that a product to be delivered to a consumer includes the following 4 parts, wherein the manager has to be careful about the product reaching the final customer in its best form:
(1) Order Processing:
Order processing is the first step in the whole system. It starts with the customer giving the order with complete specifications. The system will check the credibility and credit record of the customer. Then it will search for availability of the product, and place order with the distributor or supplier as the case may be. After making appropriate accounting entries, the goods are delivered to the customer. The efficiency of logistics is dependent on reducing the lead time or gap time when the order is placed and the time it is delivered. Some of the most popular techniques that are used in the industry are Electronic Data Interchange (EDI), Enterprise Resource Planning (ERP) and Universal Product Code.
(2) Network Design:
Network Design is a structure in which various suppliers are linked to manufacturers through various storing points on the one hand and manufacturers are linked with distributors and customers on the other. Optimum network is that network that minimizes the cost of transportation of material and goods from one point to another, so that it covers the inbound and internal movement of material in an organization, outbound logistics from manufacturer to distributors and return logistics from customers to manufacturer or suppliers.
The packaging of goods in such a manner that it is easy and economical to store, protect and move goods from one place to another. Sometimes an identification mark or logo is also used to identify the product packed inside the box. Proper packing ensures standardization and ease of use, for example, sugar and pulses in one kg packets. Safety measures such a tampering proof stickers are used while packing electronic goods such as mobiles.
(4) Distribution Strategies:
Physical distribution includes proper planning and implementation, such that there is a proper control of the flow of materials and finals products so as to satisfy the needs of the customers. Managers could use one of the strategies like cross docking or milk run, where the option to choose whether the delivery method in which goods are delivered by one supplier or collected from multiple suppliers, etc. Cross docking was started in the 1950’s in USA by military and Wal-Mart commenced using it in the 1980’s.