When it comes to manufacturing vast quantities of product from a lengthy list of inputs and providing them to distributors for end sales, it goes without saying that there are a lot of moving parts.
This all adds up to the potential for losses and breakdowns at numerous weak points. As such, manufacturing logistics is incredibly important to ensure a smooth operation while maximizing efficiency.
Just don’t get those two out of balance, or there could be problems.
Remember the supply chain disasters of 2021-2022? Hundreds of cargo ships drifted in deep water at ports around the United States while stock outages plagued the consumer market. As a result, many companies lost revenue in the short term and market share in the long term, while others relocated overseas supply chains to Mexico.
Logistics matter.
Involving a series of interconnected processes, manufacturing logistics spans just about everything having to do with managing the flow of goods. If done well, it is what creates the balance between resilience and efficiency.
In a broader context, this may include procuring raw materials, supplier coordination, inventory management, and on-time deliveries. This if often called supply chain logistics or supply chain optimization. But the area of logistics essentially deals with just those processes that govern the efficiency and functionality of moving and storing goods along the value chain.
Manufacturing logistics encompasses the following main areas:
To ensure the logistical side of your business is well in hand, strategic thinking is a requirement. This means you should view manufacturing logistics as a set of categories or functional areas to attend to. When each of these categories is optimized, you have a successful logistical operation.
Below, we will identify the key areas to optimize to ensure your manufacturing processes run smoothly, efficiently, and profitably.
Every manufacturing operation is a collection of relationships and partnerships. When choosing vendors, inventory managers, third-party logistics (3PL) providers, shelter partners when called for, or distributors, think through their qualifications carefully. Don’t just weigh the cost. Reliability, speed, and quality should be paramount.
Route planning involves so much more than just getting to the destination. It must include varying factors like number of stops, fuel costs, speed limits, toll roads, road closures, and border crossings. Review often to keep up with changes in circumstances and evolving needs.
Until the past few years, Just-In-Time (JIT) was all the rage, with materials and parts arriving on the floor just as they were needed, requiring little to no inventory space. However, this is giving way to more resilient systems. Some are calling the new approach “Just In Case” (JIC), meaning the price of shortages outweighs the cost of maintaining low to medium inventory levels in an uncertain world.
Obviously demand fluctuates. This is especially true in the current business climate. This is why it is essential to rely on granular monitoring of SKUs and implementing dock scheduling software and cutting-edge technology to better understand current patterns and future changes. Invest in a robust forecasting system that uses historical data and market trends to be better prepared.
One area many manufacturing logistics articles overlook entirely is the importance of nestling your manufacturing operations in the right spot. The question of geography is hugely important in the area of logistics considerations.
For example:
For these and other reasons, many companies are streamlining their supply chains by moving to Mexico. As home to an incredibly rich and diverse ecosystem of suppliers, vendors, and distributors, Mexico is very good for manufacturing logistics. Entire industry hubs and industrial parks coordinate to leverage economies of scale, favorable tariff structures, highly efficient inventory and transportation systems, and most of all – proximity to the end consumer.
Indeed, some of the most successful global brands like Tesla, Samsung, BMW, and Lockheed Martin have found that the secret to logistics resilience is nearshoring to North America. Through local integration, these manufacturers are achieving highly efficient processes that are also highly resilient.
Wherever your manufacturing takes places, invest the effort to optimize your manufacturing logistics. Ensure continued and expanding success by implementing processes to manage transportation considerations, maximize profitable partnerships, and accurately predict inventory and demand forecasts. By following each of the steps detailed above, any company can enjoy a seamless and durable trajectory toward manufacturing success.
