Logistics planning: What is it and why is it important?

Like most things in life, you can’t get anywhere in eCommerce without a good plan. A logistics plan is one of the most important plans you’ll have in place as an eCommerce business, as without one, you’re doomed to fail. Logistics planning takes time, but it’s critical to ensure the wheels don’t grind to a halt.

Logistic planning involves taking a long hard look at your supply chain from top to bottom, and identifying the ways in which each interlocking part will work together to keep goods flowing into your warehouse and then to the door of your customer.

A solid logistics plan will help you mitigate risks, and shine a light on otherwise unforeseen issues. It’ll help you keep costs in check while offering a good value and fast delivery to your customers, and support you in eliminating inefficiencies and optimising operations. And, above all, a good logistics plan will help you to boost growth and get ahead of the competition.

In this article, we’re going to take a look at what logistic planning is, why it’s important, and some important details to include as part of your logistics plan.

What is logistics planning?

Logistics planning is the process of obtaining relevant supply chain information and then constructing a plan to secure a constant availability of goods, while ensuring they reach your customers as quickly as possible. A logistic planner’s aim is to achieve this in a cost-effective manner, with scope to scale as sales and budgets grow.

A logistics plan will be different depending on the eCommerce business’ industry or niche, as well as the budget they have at their disposal. As a rule, though, every logistics plan should include details on:

  • Sourcing (procurement)
  • Suppliers
  • Transportation
  • Handling
  • Resource management
  • Inventory management
  • Packaging
  • Fulfilment
  • Reverse logistics

It’s by no means an easy task to create a comprehensive logistics plan with extensive details on everything we’ve mentioned above. Unless you have a lot of eCommerce experience, you’ll likely want to hire a logistics manager to develop this plan and ensure that it’s delivered accordingly. There’s also the option to outsource to a 3PL to help you, but more on this later.

Why is logistics planning important?

Logistics planning helps you to create short, medium and long-term strategies to ensure that business health stays strong, keep your customers happy, and prevent miscommunication from occurring both internally and externally.

Without a robust logistics plan in place, your business risks walking an uncharted path into the future, with little to no thought being placed on customer experiences, growth strategies, operational processes, or productivity.

This can have catastrophic consequences for your business, and result in low growth, poor customer retention, and could even cause your business to go under.

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Things to consider while developing your logistics plan

Now that we’ve given an overview of the kind of things your logistics plan should include, let’s take a look at each component in a little more detail, and discuss some of the points you should consider in each element of the logistics plan.

Sourcing materials, suppliers, tools, and services (procurement)

Procurement is the process of obtaining goods and services from suppliers. Many eCommerce businesses have a procurement manager who’s role it is to assess the needs of the company and then find the most suitable solution.

An eCommerce business needs to have great products, as well as great partners. As part of your logistics plan, it’s important to do your research and find a variety of good, reliable suppliers that you can work with, who you rely on to replenish stock as it’s needed in a timely manner and at a good price. Having multiple suppliers at your disposal will minimise the chance of stockouts from occurring.

In addition, you’ll also need to procure the right tools, equipment, and services to meet your business needs. For eCommerce, this includes courier partners, warehousing and fulfilment solutions, and technology, just to name a few.

Transportation

Whether you’re shipping raw materials, inventory, or orders, a solid courier network is vital to keeping your goods safe, and ensuring they reach their destination on time. You’ll need to consider options for both first-mile and last-mile delivery, and will likely need to consider different partners depending on whether you’re shipping domestically or internationally.

Wherever in the world you’re operating from, you’ll have a large variety of established courier partners to choose from. In many cases, you’ll find it more cost-effective to employ different couriers depending on where your products are going, and the type of products you’re shipping. You should also consider how you’ll use transportation to tactically place your inventory, and if you’re shipping high volumes, ask for bespoke quotes.

Handling

Between leaving your supplier and landing on your customer’s doorstep, materials go through many pairs of hands, on the back of a multitude of vehicles, and travel through a variety of environmental conditions. Without proper handling, goods will get damaged and go missing.

In many cases, the ways in which goods are handled is out of your control. You’ll be relying on the professionalism of others throughout the supply chain, so working with partners you can trust to take care of your goods is vital.

But, it’s also up to you to ensure that goods are packaged properly. You should use appropriate packaging for fragile goods, and ensure that goods can’t get bashed around in their box as they’re transported. Also, it’s a good idea to take out shipping insurance for high-value cargo.

Resource management

Business resources take many forms, whether that’s financial resources, human resources, technological resources, production resources, and more. Businesses of all sizes need to learn how to make the most of the resources they have, and ensure as little resources as possible go to waste or are underutilised.

The amount of resources you’ll need for resource management itself depends on the scale of your operation. Smaller businesses may be able to get by with simple planning and forecasting processes, but as businesses increase in complexity, you may need to hire a dedicated team to manage resources effectively.

Inventory management

Inventory management might not be the most straightforward aspect of your logistics plan, but good inventory management should be prioritised. By having a good understanding of your stock, such as what sells and what doesn’t, and taking steps to ensure that you minimise stockouts and wastage, is key to maximising profitability and growth.

Without the right tools, inventory management can be complex and time-consuming. However, by using inventory management software like ControlPort, which automatically collects and presents key data in a user-friendly way, you can make managing inventory far easier.

 

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Packaging

Packaging has two primary functions; getting customer orders to them in one piece, while also enabling a fantastic unboxing experience. When factoring in packaging for your logistics plan, you’ll want to consider both of these functions whilst also ensuring that your packaging is cost-effective and readily available.

Some brands choose to develop their own packaging, while others rely on the packaging provided by couriers or other third-party packaging suppliers. If you’re just starting out, branded packaging might be an unnecessary cost, but as you grow, custom packaging is essential for building brand awareness, recognition, and loyalty.

Fulfilment

Another key component of your logistic plan will be your fulfilment strategy. Fulfilment begins when a customer makes an order from your store, and ends once their order is safely placed in their hands.

A lot happens in that time, such as order processing, picking, packing, and shipping. The fulfilment aspect of your logistics plan should consider each of these, as well as how you store and position your inventory to fulfil orders effectively.

While fulfilment can be done in-house or even from your bedroom, once you reach a certain size, it can be difficult to cost-effectively fulfil orders quickly and safely.

Therefore, it’s a good idea to outsource fulfilment to a 3PL like James and James, who’ll take care of storage, picking, packing, shipping, and returns, and bundle in an award-winning inventory management platform to boot. All while offering additional great benefits and creating fantastic customer experiences.

Reverse logistics

In eCommerce, reverse logistics primarily refers to the customer returning a product. Customers decide to return products for a variety of reasons, and ensuring that they have a convenient way to return unwanted products is key to being competitive. However, a poor returns process can turn your customers off from shopping with you again in the future.

Your logistics plan should detail your returns policy and process, and identify ways in which the cost of a return can be lowered. You should identify what constitutes a valid return, how customers notify you that they want to return a product, what they need to do to return a product, and how you’ll process them once they’re back in your possession.

Ideally, you’ll also want a plan of how you’re going to lower the quantity of returns requests your business receives. We’ve recently started seeing some businesses charge for returns, but whether or not you can afford to do this to stay competitive will depend on your position in the market.

Need help with logistics planning? Get in touch with James and James

Here at James and James, we’ve helped hundreds of eCommerce businesses develop a solid logistics plan with our reliable and scalable fulfilment service. Supply chain planning can be a headache, but we can take much of that burden away by storing, picking, packing, and shipping your products via our international network of fulfilment centres.

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We also own an award-winning inventory management platform, ControlPort, that has all the tools you need to optimise inventory costs, lower wastage, minimise stockouts, and much more. Simply send your goods to us, and we’ll take it from there.

If you’d like to learn more about our fulfilment service or ControlPort, please don’t hesitate to get in touch.