While traditional logistics is focused on the movement of physical goods, an integrated logistics strategy considers all components involved throughout the entire supply chain. It looks at every department, process, and resource that plays a part in transporting products between companies and customers.
By aligning all the distinct functions within order fulfillment, from procurement to last-mile delivery, integrated logistics breaks down siloes and helps streamline operations.
Faced with the increasing demand for faster deliveries and real-time order updates, more companies are moving to integrated logistics as a way to stay competitive in the market.
What is integrated logistics?
Integrated logistics is a supply chain management model that aligns all the connected departments, processes, information, and resources to deliver products to customers as efficiently as possible.
Unlike traditional logistics, where the bulk of attention is placed on the physical movement of goods, integrated logistics considers a number of external factors, such as market demand and industry competition, that also affects fulfillment operations.
Bringing the various components under one centralized system can improve coordination, streamline workflows, and result in more optimized and cost-effective operations.
Why is it important for your company’s logistics to be integrated?
The majority of companies run an interdepartmental logistics process across multiple teams. This generally includes, but is not limited to, the following areas:
- Procurement
- Warehousing and storage
- Inventory management
- Distribution and transportation management
Each of these stand-alone functions uses its own systems and software, which are difficult for others to access. Without an easy way to coordinate and share information, a company can waste valuable time and resources. It’s also less equipped to predict inventory shortages, delivery delays, and other logistical mishaps.
Integrated logistics is a strategy that prevents these errors from happening. It serves the same purpose as traditional logistics, but further works to align the disparate departments and information. In many cases, integrated logistics is also responsible for anticipating customer expectations and maintaining its competitive advantage.
By collecting all relevant data into a single reliable source, integrated logistics creates a more efficient end-to-end flow of goods and information throughout the supply chain, and allows companies to spot any areas for improvement and quickly respond to meet market demand.
5 Benefits of integrated logistics
Any company that routinely transports physical goods can benefit from integrated logistics. The modern approach aligns different teams toward the same goal and delivers several benefits for overall operations.
Consolidated data access
One of the main benefits of integrated logistics management is gaining a central source of data. Data provides a clear picture of a company’s current logistics operations, from seasonal sales numbers to shipment routes. Examples of collected data include rising customer trends, purchase order frequencies, monthly product returns, and more.
With the wealth of collected information, even in smaller businesses and startups, integrated logistics requires order management software to keep track of all key information. From a single reliable source, stakeholders from any logistics area can access specific information and make smarter, data-based decisions.
Improved operational efficiency
Taking all logistics information out of silos and making it readily available across departments creates more efficient operations.
When a company prioritizes sharing information, the increased visibility helps departments communicate and function better as a whole. It becomes easier to access any necessary data—whether it’s inventory levels or delivery updates—required to perform at optimal efficiency.
Reduced costs and maximized profits
With a full view of the entire logistics process, companies are better equipped to identify any bottlenecks or problem areas and take active measures to resolve the issue.
For example, if there is a growing number of customer orders in a particular area, the purchasing department can set new reorder points or distribute more inventory to warehouses in those locations. Similarly, several smaller shipments along the same route can be consolidated into a full container to save on high transportation costs.
By finding opportunities to reduce wasted effort and costs, integrated logistics results in better profit margins in the long run.
Increased agility and flexibility
What distinguishes integrated logistics from traditional approaches is its ability to quickly adapt to shifts in customer needs or other unforeseen changes. This is especially beneficial for trend-based retailers or international distributors greatly affected by market fluctuations.
Thanks to the increased communication fostered by integrated logistics, companies are more agile, flexible, and better able to respond to disruptions.
Established competitive advantage
With all the above advantages, integrated logistics leads to optimized operations and a streamlined supply chain. Not only does this increase customer satisfaction and profit, but companies are also able to establish a competitive advantage and further expand into new product categories and markets.
How to get started using integrated logistics in your business
An integrated logistics system will look different for every business. For instance, an ecommerce store operates a completely different supply chain from a manufacturer. To integrate logistics within your own company, here are the general steps to get started:
Evaluate existing logistics operations
Start by identifying all the departments, processes, and resources across your current logistics operations. By evaluating all the internal components and how they work together, you can determine areas that need optimization and what’s needed to move toward an integrated logistics system.
Analyze relevant external factors
Aside from all internal systems, integrated logistics looks at multiple external factors that can affect a company’s supply chain operations. This includes analyzing competitors, market trends, new third-party logistics services, and anything that informs its logistics strategy.
Plan your logistics goals
Only when all initial information has been collected can a business begin planning realistic logistic goals.
While the result of any integrated logistics is increased coordination and efficiency, it’s essential to establish specific short-term and long-term goals.
For example, will your business start by implementing an inventory management platform to consolidate real-time data? Or is the priority to first improve delivery speeds and address customer demands?
Integrated logistics is a continuous process that evolves as companies grow and markets change. A set of clearly defined goals and metrics helps determine whether the strategy is truly contributing to a company’s success.
How QuickBooks supports successful integrated logistics efforts
A successful integrated logistics effort relies on strong alignment between departments and data sources. Instead of maintaining an individual tool for every function, as in traditional logistics, it’s crucial to integrate transparent data-sharing across all areas.
QuickBooks Enterprise facilitates the process with best-in-class business management software that consolidates all critical information, from customer orders to inventory levels to delivery schedules.
Our platform automatically tracks and updates all data in real time and generates customized inventory reports to aid strategic decision-making.
With all areas of logistics managed in one comprehensive tool, QuickBooks Enterprise makes it easy to implement integrated logistics and improve efficiency in your company.
Final thoughts
Integrated logistics aims to increase operational efficiency, delivery speed, and customer satisfaction while maximizing profit. To do this, a company removes all silos and approaches logistics as a unified function.
With consolidated information managed on a single platform, integrated logistics solutions can better optimize operations and grow the overall business.
