In a nutshell, logistics planning is the process of deciding how to get products to customers at the lowest possible cost. The objective of logistics planning is to create a lean and cost-effective operation that can deliver service levels at all times and withstand supply chain disruptions.
While the process for each merchant may appear different, it generally entails considering logistics systems (such as procurement, manufacturing, and delivery) and planning all of the logistical functions involved in each system, including warehousing, fulfillment, returns processing, raw material management, and inventory management. The director of logistics typically manages the planning process, though other critical players may have input.
These processes and functions are evaluated for cost, optimized for efficiency, and planned to withstand unanticipated obstacles during logistics planning.
Why logistics planning is important for ecommerce businesses
Both your company’s safety and existence are at risk if you don’t plan ahead.
It, like any other plan or backup strategy, aids in the protection of your company against unforeseen problems. But logistics planning may also help you run your business more efficiently and prepare for future success.
Here are four of the most significant advantages of organizing your ecommerce logistics.
1. Chart a path for reaching long-term goals
When you first start an ecommerce firm, you may not be thinking too far into the future — after all, just getting your brand up and running is a full-time job in itself. Once you’ve established, logistics preparation can help you grow and keep your business going.
The goal-setting stage of logistics planning forces you to consider your company’s objectives both in the near and long terms. To make sound decisions about how to manage your logistics, you must first establish future goals for how you want to develop.
However, to achieve those aims and make a profit, you’ll need to figure out how you’ll keep delivering what consumers want while lowering expenses — which is impossible without first carefully planning logistics processes like storage, delivery, and fulfillment.
Having a solid logistics operation plan helps you stay on budget, on schedule, and in line with customer expectations, allowing you to work more efficiently towards your short-term objectives.
Short-term targets, once accomplished, will set you up for long-term objectives in the future. You may worry less about fluke incidents or unforeseen problems derailing your company later on if you establish a resilient supply chain now through planning.
2. Reduce supply chain costs
When it comes to logistics, ecommerce companies frequently exceed their budgets. Logistic planning can help you avoid making unprofitable or needless purchases that eat into your earnings.
When you have a plan for carrying out your logistics, you won’t be tempted to select a less expensive solution just because it’s quick and easy. Rather, with time and effort, you may study the most cost-effective supply chain options, as well as overlooked logistics expenditures (such as labor, warehousing insurance, and equipment).
If you outsource logistics, a competent 3PL will help you save money in your supply chain. These businesses have mastered how to execute operations faster, cheaper, and more effectively than most ecommerce firms could do on their own as specialists in logistic management — and as your ally, they’ll save you time and money.
3. Meet customer demand quicker
Skilled logistics may be efficient and effective, but they must first be planned. Well-planned logistic systems are streamlined logistic systems. Your company will always be able to meet consumer demand quickly if you carefully manage inventory levels, hone operations, and use fast shipping alternatives.
Partnering with a 3PL to meet client demand is harder — but it eases the burden on business owners. Launch Fulfillment, for example, leverages its logistics knowledge and resources to quickly and inexpensively satisfy its clients’ end consumers.
4. Increase revenue
Another benefit of logistics planning is increased income. However, this is only one of the benefits to logistics planning, and it’s a significant reason to plan logistics on its own.
If your planned goals have kept you on track and lowered supply chain costs, you should see monetary benefits and improved profit margins. As a general rule, meeting client needs increases customer happiness and loyalty, boosts the likelihood of repeat purchases, and usually translates to greater sales.
Fast delivery lowers your cart abandonment rate and improves your AOV, resulting in more profitable transactions. If you want to grow your business, you must increase earnings over time, so it’s critical that you consider logistics in order to achieve the highest possible profit margin on each transaction.