
<p>The <strong>supply chain</strong> is the set of processes that are responsible for bringing <strong>goods</strong> or <strong>services</strong> from the supplier to the end customer. This chain is very important in business management, as it can have a great impact on the <strong>efficiency</strong> and <strong>profitability</strong> of a company.</p>



<p>The supply chain is made up of several key elements that must be carefully managed to ensure its proper functioning. These elements include <a href="https://api.novocargo.com/en/raw-material-inventory-what-does-it-refer-to/" data-type="post" data-id="5852">inventory management</a>, production planning, supplier management, transportation and logistics, among others.</p>


<div class="lwptoc lwptoc-autoWidth lwptoc-baseItems lwptoc-light lwptoc-notInherit" data-smooth-scroll="1" data-smooth-scroll-offset="24"><div class="lwptoc_i">    <div class="lwptoc_header">
        <b class="lwptoc_title">Contenidos</b>                    <span class="lwptoc_toggle">
                <a href="#" class="lwptoc_toggle_label" data-label="mostrar">ocultar</a>
            </span>
            </div>
<div class="lwptoc_items lwptoc_items-visible">
    <div class="lwptoc_itemWrap"><div class="lwptoc_item">    <a href="#Supplier_management">
                    <span class="lwptoc_item_number">1</span>
                <span class="lwptoc_item_label">Supplier management</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Supply_chain_and_responsibilities">
                    <span class="lwptoc_item_number">2</span>
                <span class="lwptoc_item_label">Supply chain and responsibilities</span>
    </a>
    <div class="lwptoc_itemWrap"><div class="lwptoc_item">    <a href="#Risks_within_the_inventory_and_the_supply_chain">
                    <span class="lwptoc_item_number">2.1</span>
                <span class="lwptoc_item_label">Risks within the inventory and the supply chain</span>
    </a>
    </div></div></div></div></div>
</div></div>


<p>One of the most important elements of the supply chain is inventory management. This involves <strong>keeping close control of the products held in </strong><a href="https://economictimes.indiatimes.com/definition/stocks" target="_blank" rel="noreferrer noopener">stock</a>, and planning purchases and sales to ensure that you always have adequate inventory to meet customer demand. Inventory management can also include materials management, as many companies need raw materials or components to produce their products.</p>



<p>Another important element of the supply chain is <strong>production planning</strong>. This involves planning the quantity of products to be produced, the time it will take to produce them, and the cost associated with production. Production planning must be closely coordinated with <strong>inventory management</strong> to ensure that sufficient products are available to meet customer demand.</p>



<h2 class="wp-block-heading"><span id="Supplier_management">Supplier management</span></h2>



<p>Supplier management is also a key element of the supply chain. This involves <strong>selecting the right suppliers, negotiating prices and contract terms</strong>, and ensuring that quality and delivery time specifications are met. Supplier management is critical to ensure that you have access to the right products and materials at the right time.</p>



<p><strong>Transportation</strong> and logistics are also important elements of the supply chain. This involves managing the means of transportation to get products from the supplier to the end customer. Logistics can also include the storage and distribution of products, and the management of <strong>orders</strong> and shipments.</p>



<p>In general, the <strong>supply chain is structured in several levels</strong>. At the top of the chain are the suppliers of raw materials and components, who supply products to manufacturers. The manufacturers transform these raw materials and components into final products, which are then <strong>shipped</strong> to wholesalers or <strong>distributors</strong>. Wholesalers or distributors are responsible for storing and distributing the products to retailers or end customers.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="683" src="https://api.novocargo.com/wp-content/uploads/2023/04/pexels-tiger-lily-4484078-min-1-1024x683.jpg" alt="Guy working on supply chain in warehouse " class="wp-image-6100" srcset="https://api.novocargo.com/wp-content/uploads/2023/04/pexels-tiger-lily-4484078-min-1-1024x683.jpg 1024w, https://api.novocargo.com/wp-content/uploads/2023/04/pexels-tiger-lily-4484078-min-1-300x200.jpg 300w, https://api.novocargo.com/wp-content/uploads/2023/04/pexels-tiger-lily-4484078-min-1-768x512.jpg 768w, https://api.novocargo.com/wp-content/uploads/2023/04/pexels-tiger-lily-4484078-min-1-1536x1024.jpg 1536w" sizes="(max-width: 1024px) 100vw, 1024px"></figure>



<h2 class="wp-block-heading"><span id="Supply_chain_and_responsibilities">Supply chain and responsibilities</span></h2>



<p>Each of these levels has its own processes and responsibilities. <strong>Suppliers</strong> are responsible for providing the products and materials needed for production, while <strong>manufacturers</strong> are responsible for transforming these products and materials into final products. Wholesalers and <strong>distributors</strong> are responsible for the logistics and distribution of products to retailers and end customers.</p>



<p>In the supply chain there are also different types of risks that must be carefully managed. For example, there may be <strong>delays</strong> in product delivery due to external factors, such as natural disasters or transportation problems. </p>



<h3 class="wp-block-heading"><span id="Risks_within_the_inventory_and_the_supply_chain">Risks within the inventory and the supply chain </span></h3>



<p>There can also be internal risks, such as problems in production or inventory management. Therefore, it is important to have a contingency plan and adequate risk management in place to minimize negative impacts on the supply chain.</p>



<p>In summary, the supply chain is a crucial element in business management, and its proper functioning can make the difference between the success and failure of a company. <strong>Proper management of the different elements of the chain</strong>, such as inventory management, production planning, supplier management and logistics, is essential to ensure that products or services reach the end customer at the right time and with the expected quality. </p>



<p>In addition, it is important to have a <strong>contingency plan and adequate risk management to minimize negative impacts </strong>on the supply chain. In short, the supply chain is a complex process that requires careful and continuous management to ensure business success.</p>


Supply chain: elements and structure


<p>Logistics and distribution planning are essential aspects of any <strong>business</strong>. Specially for one that aims to increase productivity and achieve growth. It doesn’t matter how big or small</p>



<p>An efficient logistics and <strong>distribution plan helps a company streamline its processes</strong>. Also to reduce operational costs, and improve customer satisfaction.</p>


<div class="lwptoc lwptoc-autoWidth lwptoc-baseItems lwptoc-light lwptoc-notInherit" data-smooth-scroll="1" data-smooth-scroll-offset="24"><div class="lwptoc_i">    <div class="lwptoc_header">
        <b class="lwptoc_title">Contenidos</b>                    <span class="lwptoc_toggle">
                <a href="#" class="lwptoc_toggle_label" data-label="mostrar">ocultar</a>
            </span>
            </div>
<div class="lwptoc_items lwptoc_items-visible">
    <div class="lwptoc_itemWrap"><div class="lwptoc_item">    <a href="#Embrace_Technology">
                    <span class="lwptoc_item_number">1</span>
                <span class="lwptoc_item_label">Embrace Technology</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Optimize_Inventory_Management">
                    <span class="lwptoc_item_number">2</span>
                <span class="lwptoc_item_label">Optimize Inventory Management</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Streamline_Transportation">
                    <span class="lwptoc_item_number">3</span>
                <span class="lwptoc_item_label">Streamline Transportation</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Improve_Communication">
                    <span class="lwptoc_item_number">4</span>
                <span class="lwptoc_item_label">Improve Communication</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Continuously_Monitor_and_Improve">
                    <span class="lwptoc_item_number">5</span>
                <span class="lwptoc_item_label">Continuously Monitor and Improve</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Conclusion_on_logistics_and_distribution_plans">
                    <span class="lwptoc_item_number">6</span>
                <span class="lwptoc_item_label">Conclusion on logistics and distribution plans</span>
    </a>
    </div></div></div>
</div></div>


<h2 class="wp-block-heading"><span id="Embrace_Technology">Embrace Technology</span></h2>



<p>In today’s <strong>digital age</strong>, technology plays a crucial role in logistics. Companies that use the latest softwares to manage their logistics operations are more likely to achieve higher levels of performance.</p>



<p>For example, implementing a transportation management system (<strong>TMS</strong>) can help automate freight management, optimize routing, and reduce costs associated with transportation.</p>



<p>Moreover, using cloud-based software can provide realtime visibility into the supply chain and streamline communication between different departments.</p>



<p>For example, the use of barcoding and <a href="https://api.novocargo.com/en/cross-docking-inventory-management-supply-chain/" data-type="post" data-id="939">RFID</a> technology can also improve inventory management and reduce errors in order processing. By embracing technology, businesses can optimize their logistics operations and increase productivity.</p>



<h2 class="wp-block-heading"><span id="Optimize_Inventory_Management">Optimize Inventory Management</span></h2>



<p>Inventory management is another crucial aspect of logistics and distribution planning. It is essential to keep the right level of <strong>inventory</strong> to meet customer demand without incurring unnecessary storage costs. Overstocking can tie up valuable <strong>resources</strong> and understocking can lead to stockouts and lost sales.</p>



<p>To optimize inventory management, businesses need to adopt a data-driven approach. Analyzing sales data, demand patterns, and customer behavior can <strong>help companies identify trends </strong>and make informed decisions about inventory levels. Implementing a just-in-time (JIT) inventory system can also help reduce inventory holding costs and improve productivity by reducing waste and inefficiencies.</p>



<h2 class="wp-block-heading"><span id="Streamline_Transportation">Streamline Transportation</span></h2>



<p><strong>Transportation is a key component</strong> of logistics and distribution planning, and optimizing it can lead to significant productivity gains. One way to streamline transportation is to use multiple modes of transportation, such as air, sea, rail, and road, to reduce shipping costs and improve delivery times. This approach, known as intermodal transportation, <strong>can help companies overcome the limitations</strong> of any single mode of transportation.</p>



<p>Another way to streamline transportation is to use a <strong>third-party logistics</strong> (3PL) provider. By outsourcing logistics operations to a 3PL provider, companies can reduce the costs associated with maintaining their own fleet and logistics <strong>infrastructure</strong>. 3PL providers can also offer expertise in logistics planning and help businesses optimize their supply chain.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="683" src="https://api.novocargo.com/wp-content/uploads/2023/03/gerentes-almacen-caminando-gran-centro-distribucion-min-1024x683.jpg" alt="A man and a women working on logistics and distribution in a warehouse" class="wp-image-6048" srcset="https://api.novocargo.com/wp-content/uploads/2023/03/gerentes-almacen-caminando-gran-centro-distribucion-min-1024x683.jpg 1024w, https://api.novocargo.com/wp-content/uploads/2023/03/gerentes-almacen-caminando-gran-centro-distribucion-min-300x200.jpg 300w, https://api.novocargo.com/wp-content/uploads/2023/03/gerentes-almacen-caminando-gran-centro-distribucion-min-768x512.jpg 768w, https://api.novocargo.com/wp-content/uploads/2023/03/gerentes-almacen-caminando-gran-centro-distribucion-min-1536x1024.jpg 1536w" sizes="(max-width: 1024px) 100vw, 1024px"></figure>



<h2 class="wp-block-heading"><span id="Improve_Communication">Improve Communication</span></h2>



<p>Effective communication is essential for productivity in logistics and distribution planning. <strong>Miscommunication between different departments or with external partners can lead to delays, errors, and inefficiencies</strong>. Therefore, it is important to establish clear communication channels and protocols for all logistics operations.</p>



<p>Using a centralized platform for communication, such as a project management tool or a messaging app, can help ensure that everyone involved in logistics operations is on the same page. <strong>Regular meetings and check-ins can also help improve communication </strong>and collaboration between different departments and external partners.</p>



<h2 class="wp-block-heading"><span id="Continuously_Monitor_and_Improve">Continuously Monitor and Improve</span></h2>



<p>Finally, continuous monitoring and improvement are essential for optimizing productivity in logistics and distribution planning. Businesses need to regularly track and <strong>analyze logistics data</strong> to identify areas for improvement and implement corrective actions. Key performance indicators (<a href="https://www.qlik.com/us/kpi" target="_blank" rel="noreferrer noopener">KPIs</a>), such as on-time delivery, order accuracy, and inventory turnover, can help businesses measure their performance and identify areas for improvement.</p>



<p>Implementing a continuous improvement process, such as the Plan-Do-Check-Act (PDCA) cycle, can help businesses identify and <strong>eliminate inefficiencies</strong> in their logistics operations. By continuously monitoring and improving their logistics and distribution plan, businesses can optimize their operations and achieve higher levels of productivity.</p>



<h2 class="wp-block-heading"><span id="Conclusion_on_logistics_and_distribution_plans">Conclusion on logistics and distribution plans</span></h2>



<p>In conclusion, logistics and distribution planning play a crucial role in achieving productivity improvements in any business. By <strong>embracing technology</strong>, optimizing inventory management, streamlining transportation, improving communication, and continuously monitoring and improving, businesses can optimize their logistics operations and achieve growth.</p>


African American woman working on distribution

Logistics and distribution plan: productivity improvement


<p>Enterprise Resource Planning (ERP) is a software specially designed to control the flow of information in a company. This type of software is in charge of different internal operations of a company: from production to distribution.</p>


<div class="lwptoc lwptoc-autoWidth lwptoc-baseItems lwptoc-light lwptoc-notInherit" data-smooth-scroll="1" data-smooth-scroll-offset="24"><div class="lwptoc_i">    <div class="lwptoc_header">
        <b class="lwptoc_title">Contenidos</b>                    <span class="lwptoc_toggle">
                <a href="#" class="lwptoc_toggle_label" data-label="mostrar">ocultar</a>
            </span>
            </div>
<div class="lwptoc_items lwptoc_items-visible">
    <div class="lwptoc_itemWrap"><div class="lwptoc_item">    <a href="#Types_of_ERP_systems">
                    <span class="lwptoc_item_number">1</span>
                <span class="lwptoc_item_label">Types of ERP systems</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#ERP_functionalities_and_features">
                    <span class="lwptoc_item_number">2</span>
                <span class="lwptoc_item_label">ERP functionalities and features</span>
    </a>
    <div class="lwptoc_itemWrap"><div class="lwptoc_item">    <a href="#Automation">
                    <span class="lwptoc_item_number">2.1</span>
                <span class="lwptoc_item_label">Automation</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Real-time_operation">
                    <span class="lwptoc_item_number">2.2</span>
                <span class="lwptoc_item_label">Real-time operation</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Intuitive_interface">
                    <span class="lwptoc_item_number">2.3</span>
                <span class="lwptoc_item_label">Intuitive interface</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Adaptability">
                    <span class="lwptoc_item_number">2.4</span>
                <span class="lwptoc_item_label">Adaptability</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Easy_maintenance">
                    <span class="lwptoc_item_number">2.5</span>
                <span class="lwptoc_item_label">Easy maintenance</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Modularity">
                    <span class="lwptoc_item_number">2.6</span>
                <span class="lwptoc_item_label">Modularity</span>
    </a>
    </div></div></div><div class="lwptoc_item">    <a href="#Government_resource_planning">
                    <span class="lwptoc_item_number">3</span>
                <span class="lwptoc_item_label">Government resource planning</span>
    </a>
    </div></div></div>
</div></div>


<h2 class="wp-block-heading"><span id="Types_of_ERP_systems">Types of ERP systems</span></h2>



<p>The <strong>fluidity</strong> of an Enterprise Resource Planning system and the different factors that affect it mean that they can be grouped according to functional levels, the size of the business or company and its deployment. To simplify the types, these systems can be grouped as follows:</p>



<ul>
<li><strong>Generalist Enterprise Resource Planning System</strong>: Many ERP and cloud system solutions are generalist. This means that they are adapted to the processes of all industries, these are large fractions of the market.</li>
</ul>



<ul>
<li><strong>Open Source Enterprise Resource Planning System</strong>: Open source ERP system solutions are a small fraction of the total ERP system market, it increases their usability and user adoption due to their highly customized processes.</li>
</ul>



<h2 class="wp-block-heading"><span id="ERP_functionalities_and_features">ERP functionalities and features</span></h2>



<p>As we have mentioned above the primary objective use of an Enterprise Resource Planning is to provide support to the company in its administrative <strong>tasks and decision making</strong>, by automating all processes. In this way we can:</p>



<ul>
<li>Obtain data in real time.</li>



<li>Optimize Back Office tasks.</li>



<li>Control the workflow.</li>



<li>Gives the company greater control over what it does.</li>



<li>It makes a more efficient use of information.</li>



<li>Allows predicting problematic situations.</li>



<li>Avoids complications in the execution of work.</li>
</ul>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="683" src="https://api.novocargo.com/wp-content/uploads/2023/03/pexels-vlada-karpovich-4050289-min-1024x683.jpg" alt="WOMAN working from home" class="wp-image-6026" srcset="https://api.novocargo.com/wp-content/uploads/2023/03/pexels-vlada-karpovich-4050289-min-1024x683.jpg 1024w, https://api.novocargo.com/wp-content/uploads/2023/03/pexels-vlada-karpovich-4050289-min-300x200.jpg 300w, https://api.novocargo.com/wp-content/uploads/2023/03/pexels-vlada-karpovich-4050289-min-768x512.jpg 768w, https://api.novocargo.com/wp-content/uploads/2023/03/pexels-vlada-karpovich-4050289-min-1536x1024.jpg 1536w, https://api.novocargo.com/wp-content/uploads/2023/03/pexels-vlada-karpovich-4050289-min-2048x1365.jpg 2048w" sizes="(max-width: 1024px) 100vw, 1024px"></figure>



<h3 class="wp-block-heading"><span id="Automation">Automation</span></h3>



<p>An Enterprise Resource Planning should be to facilitate your work, reducing costs, optimizing processes and integrating all the work that is done daily in a company to increase productivity, avoiding many processes that can be delegated to <a href="https://api.novocargo.com/en/software-and-new-technology-in-logistics/" data-type="post" data-id="5555">technology</a>.</p>



<h3 class="wp-block-heading"><span id="Real-time_operation">Real-time operation</span></h3>



<p>Some Enterprise Resource Planning systems have the ability to perform operations in a synchronized manner, which evidences the efficiency, speed of response and agility of the software.</p>



<p>This enables much more efficient, complete and cost-effective management of projects, resources and business processes, with minimal damage.</p>



<h3 class="wp-block-heading"><span id="Intuitive_interface">Intuitive interface</span></h3>



<p>When choosing a management software you should keep in mind that it should facilitate your day-to-day life, not complicate it. This is very relevant for the return on investment as it will reduce the costs of implementing the Enterprise Resource Planning system.</p>



<h3 class="wp-block-heading"><span id="Adaptability">Adaptability</span></h3>



<p>Currently there are Enterprise Resource Planning programs in the cloud that allow you to be used from operating system and / or device (Windows, <a href="https://www.apple.com/" target="_blank" rel="noreferrer noopener">Apple</a>, Linux). In addition, they allow multi-device use from any place where you decide to work.</p>



<h3 class="wp-block-heading"><span id="Easy_maintenance">Easy maintenance</span></h3>



<p>When buying any product, the initial cost of hiring it, implementing it, training staff and its maintenance must be taken into account. That is why you should evaluate if your Enterprise Resource Planning can work in the long term. In this way, you can foresee that it will be compatible with the development of the company in the future.</p>



<h3 class="wp-block-heading"><span id="Modularity">Modularity</span></h3>



<p>Enterprise Resource Planning allows you to include different tools, called modules, connected to each other. That is why modularity is considered a very important feature. Among the options, depending on the needs of your company, you can find the following:</p>



<ul>
<li>Financial management.</li>



<li>The management of the company’s marketing.</li>



<li><a href="https://www.salesforce.com/eu/learning-centre/crm/what-is-crm/" target="_blank" rel="noreferrer noopener">CRM</a> or contact management.</li>



<li>Human Resources (HR).</li>



<li>Material Requirements Planning.</li>



<li>Sales or commercial activities.</li>



<li>Stock and inventory control.</li>



<li>Supply Chain Management module.</li>



<li>Project management.</li>



<li>Team management.</li>



<li>Task management.</li>
</ul>



<h2 class="wp-block-heading"><span id="Government_resource_planning">Government resource planning</span></h2>



<p><strong>GRP</strong>&nbsp;stands for “<strong>Government resource planning</strong>“. These systems are particularly needed for government-driven business groups and integrate office&nbsp;<a href="https://new.siemens.com/global/en/products/automation/systems.html" target="_blank" rel="noreferrer noopener">automation system</a>&nbsp;for them.</p>



<p>This kind of software is designed for the unique requirements of public financial management, where the budget is the legal realisation of&nbsp;<strong>government</strong>&nbsp;intentions. The structure of the software, even the core algorithms and main interfaces, resemble.&nbsp;</p>



<p>Private or public, both systems are used to&nbsp;<strong>improve productivity and the performance of businesses</strong>. The comparison of private vs. public of the softwares implementations show that the main factors&nbsp;<strong>influencing success</strong>&nbsp;in the public sector are mostly cultural.</p>



<p>For the management of a business, they must focus on&nbsp;<strong>optimising</strong>&nbsp;their&nbsp;<strong>assets</strong>&nbsp;when it comes to investment information (planning, decision, budget…) and the effect is to implement a new kind of strategy in order to manage these operations.</p>


ERP: functionalities and features


<p><strong>Ecommerce is a booming business </strong>and there are millions of people who want to participate in the sector. What sets it apart from traditional businesses is the fact <strong>that anyone can do it </strong>at<strong> </strong>home<strong>.</strong></p>



<p><strong>However</strong>, there is more than meets the eye when it comes to <strong>running a successful ecommerce </strong>store. There are many things to consider, such as: marketing, logistics, and customer service, among others.</p>


<div class="lwptoc lwptoc-autoWidth lwptoc-baseItems lwptoc-light lwptoc-notInherit" data-smooth-scroll="1" data-smooth-scroll-offset="24"><div class="lwptoc_i">    <div class="lwptoc_header">
        <b class="lwptoc_title">Contenidos</b>                    <span class="lwptoc_toggle">
                <a href="#" class="lwptoc_toggle_label" data-label="mostrar">ocultar</a>
            </span>
            </div>
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    <div class="lwptoc_itemWrap"><div class="lwptoc_item">    <a href="#Fast_ecommerce_delivery">
                    <span class="lwptoc_item_number">1</span>
                <span class="lwptoc_item_label">Fast ecommerce delivery</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Quality_ecommerce_products">
                    <span class="lwptoc_item_number">2</span>
                <span class="lwptoc_item_label">Quality ecommerce products</span>
    </a>
    <div class="lwptoc_itemWrap"><div class="lwptoc_item">    <a href="#Why_is_a_good_reputation_important_for_business">
                    <span class="lwptoc_item_number">2.1</span>
                <span class="lwptoc_item_label">Why is a good reputation important for business?</span>
    </a>
    </div></div></div><div class="lwptoc_item">    <a href="#Loyalty_programs_in_ecommerce">
                    <span class="lwptoc_item_number">3</span>
                <span class="lwptoc_item_label">Loyalty programs in ecommerce</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Value_for_money_in_ecommerce">
                    <span class="lwptoc_item_number">4</span>
                <span class="lwptoc_item_label">Value for money in ecommerce</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Excellent_ecommerce_customer_service">
                    <span class="lwptoc_item_number">5</span>
                <span class="lwptoc_item_label">Excellent ecommerce customer service</span>
    </a>
    </div></div></div>
</div></div>


<h2 class="wp-block-heading"><span id="Fast_ecommerce_delivery">Fast ecommerce delivery</span></h2>



<p>Delivery is a crucial part of the ecommerce process. It is what <strong>differentiates you from your competitors, </strong>who may have similar products and features to yours, and the speed of your deliveries can be an advantage over other companies.</p>



<p>If your customers<strong> receive deliveries faster </strong>than your competitors, they are more likely to make repeat purchases. If a customer knows they won’t have to wait days or weeks for their order to arrive, they are much more likely to buy again later.</p>



<h2 class="wp-block-heading"><span id="Quality_ecommerce_products">Quality ecommerce products</span></h2>



<p>One of the most important parts of selling online is having a quality product. This goes beyond just good functionality, but also includes its aesthetic appeal and the overall experience for the customer.</p>



<p><strong>Quality</strong> <strong>products</strong> are important for your ecommerce business because they can <strong>attract</strong> more customers, who will become repeat customers. It is also an important part of <strong>building your brand reputation</strong> <strong>among</strong> <strong>consumers</strong>, which other businesses will notice when deciding whether or not to work with you.</p>



<h3 class="wp-block-heading"><span id="Why_is_a_good_reputation_important_for_business"><strong>Why is a good reputation important for business?</strong></span></h3>



<p>A positive reputation is crucial for the <strong>growth</strong> of your digital and offline business. This is because consumers tend to <strong>engage</strong> more often with a business or company they <strong>trust</strong>. It also can increase customer engagement and enable businesses to hire and <strong>retain more talented, loyal employees</strong> (which over time can help you to reduce hiring and turnover costs).</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="683" src="https://api.novocargo.com/wp-content/uploads/2023/01/pexels-karolina-grabowska-4968391-min-1024x683.jpg" alt="A person buying online on a computer" class="wp-image-5961" srcset="https://api.novocargo.com/wp-content/uploads/2023/01/pexels-karolina-grabowska-4968391-min-1024x683.jpg 1024w, https://api.novocargo.com/wp-content/uploads/2023/01/pexels-karolina-grabowska-4968391-min-300x200.jpg 300w, https://api.novocargo.com/wp-content/uploads/2023/01/pexels-karolina-grabowska-4968391-min-768x512.jpg 768w, https://api.novocargo.com/wp-content/uploads/2023/01/pexels-karolina-grabowska-4968391-min-1536x1024.jpg 1536w, https://api.novocargo.com/wp-content/uploads/2023/01/pexels-karolina-grabowska-4968391-min-2048x1365.jpg 2048w" sizes="(max-width: 1024px) 100vw, 1024px"><figcaption class="wp-element-caption">Person shopping on the internet – ecommerce</figcaption></figure>



<h2 class="wp-block-heading"><span id="Loyalty_programs_in_ecommerce">Loyalty programs in ecommerce</span></h2>



<p>The first thing to note about loyalty programs is that they are a great way to <strong>reward customers </strong>for their loyalty. They can also help you build a better relationship with your customers, which translates into <strong>higher conversions and more sales.</strong></p>



<p>Some of the ways ecommerce companies use loyalty programs are:</p>



<p>Free <a href="https://ecommerce-platforms.com/glossary/shipping" target="_blank" rel="noreferrer noopener">shipping</a> or a discount code on their next order when they purchase a certain number of items.<br>A special discount code that can only be used once per customer per <strong>purchase based on </strong>their birthday or anniversary date (if they celebrate).</p>



<h2 class="wp-block-heading"><span id="Value_for_money_in_ecommerce">Value for money in ecommerce</span></h2>



<p>Value for money is important for any ecommerce business. It means <strong>offering products at the right price</strong>, but it’s not just about price, it’s about quality. Value for money is about offering good value for money and this includes offering a <strong>good product.</strong></p>



<p>The best way to understand what value for money is is to understand what your customers are looking for in terms of value and then make sure you can offer them this every time they shop with you so that they keep coming back time and time again.</p>



<h2 class="wp-block-heading"><span id="Excellent_ecommerce_customer_service">Excellent ecommerce customer service</span></h2>



<p>Excellent <strong>customer service</strong> is the key to long-term success. It’s not just about answering questions, sending emails, making phone calls and responding on social media. It’s much more than that: it’s a mindset and culture based on empathy, <strong>understanding and patience </strong>that permeates every aspect of your business.</p>



<p>Customer service can be intimidating for<strong> online retailers</strong> because they face the challenge of not having a physical presence in many cases. This means you have to build trust with your customers from afar through excellent <strong>communication</strong> <strong>via</strong> <strong>ecommerce</strong> or other platforms such as live chat <a href="https://api.novocargo.com/en/software-and-new-technology-in-logistics/" data-type="post" data-id="5555">software</a> or social media messaging apps like Facebook Messenger or WhatsApp.</p>


5 keys to master ecommerce


<p>Reverse logistics is a subset of<strong> supply chain management</strong> that encompasses the entire <strong>reverse proces</strong>s. In retail, this typically involves the sale of used or returned goods at a discount and their subsequent resale. Reverse logistics also takes into account the <strong>packaging</strong>, <strong>shipping</strong> and <strong>storage</strong> of <strong>returned products</strong> until they can be resold or recycled. </p>



<p>This field has become increasingly <strong>sophisticated over the years as technology</strong> has advanced and companies have learned to streamline their processes. </p>


<div class="lwptoc lwptoc-autoWidth lwptoc-baseItems lwptoc-light lwptoc-notInherit" data-smooth-scroll="1" data-smooth-scroll-offset="24"><div class="lwptoc_i">    <div class="lwptoc_header">
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                <span class="lwptoc_item_label">Technology is improving reverse logistics</span>
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                <span class="lwptoc_item_label">Automated sorting systems</span>
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                <span class="lwptoc_item_label">Inspection/Repair</span>
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                <span class="lwptoc_item_label">Technology streamlines reverse logistics</span>
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                <span class="lwptoc_item_label">Tracking technology is used to improve customer service</span>
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<h2 class="wp-block-heading"><span id="Technology_is_improving_reverse_logistics">Technology is improving reverse logistics</span></h2>



<p>Technology can help reduce costs by automating tasks that would otherwise be done manually, such as entering data into a <strong>system</strong>, <strong>managing</strong> <strong>order</strong> <strong>fulfillment</strong> and <strong>transportation</strong> in real time, and tracking inventory levels to determine which items need to be replenished or stocked.</p>



<p>Technology can also improve customer satisfaction by <strong>enabling companies to communicate with consumers immediately</strong> after they return an item so they can provide timely assistance if needed. This can lead to an increase in customers willing to buy from you again because they feel you care about them.</p>



<h2 class="wp-block-heading"><span id="Reverse_logistics_is_becoming_more_efficient">Reverse logistics is becoming more efficient</span></h2>



<p>Reverse logistics is becoming more efficient thanks to <strong>technology</strong>, <strong>automation</strong> and <strong><a href="https://www.fastcoo.com/en/digitalization-in-logistics/" target="_blank" rel="noreferrer noopener">digitalization</a></strong>. Thanks to data analytics, companies can now optimize their reverse logistics processes by identifying opportunities for improvement.</p>



<p>This means they can recover more product and <strong>reduce the cost of returning goods to the market</strong> or using them for other purposes, such as reconditioning or remanufacturing products.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="673" src="https://api.novocargo.com/wp-content/uploads/2022/12/pexels-ana-benet-8243357-min-1024x673.jpg" alt="Logistics port" class="wp-image-5923" srcset="https://api.novocargo.com/wp-content/uploads/2022/12/pexels-ana-benet-8243357-min-1024x673.jpg 1024w, https://api.novocargo.com/wp-content/uploads/2022/12/pexels-ana-benet-8243357-min-300x197.jpg 300w, https://api.novocargo.com/wp-content/uploads/2022/12/pexels-ana-benet-8243357-min-768x505.jpg 768w, https://api.novocargo.com/wp-content/uploads/2022/12/pexels-ana-benet-8243357-min-1536x1010.jpg 1536w, https://api.novocargo.com/wp-content/uploads/2022/12/pexels-ana-benet-8243357-min-2048x1346.jpg 2048w" sizes="(max-width: 1024px) 100vw, 1024px"></figure>



<h2 class="wp-block-heading"><span id="Automated_sorting_systems">Automated sorting systems</span></h2>



<p>A sorting system is a machine or <strong>process for sorting products by type.</strong> Sorting systems can be manual or automated, depending on the size of the operation and the type of product being sorted.</p>



<p>Automated sorting systems are typically used in <strong>large-scale operations </strong>to sort items quickly and efficiently, while manual sorting systems may be more appropriate in smaller environments or when items need to be sorted by hand.</p>



<h2 class="wp-block-heading"><span id="InspectionRepair">Inspection/Repair</span></h2>



<p>Inspection and repair is an important part of reverse logistics. <strong>Inspecting</strong> a product can be done on-site or off-site. <strong>Repairing a product means it can be sold agai</strong>n, which is great for companies because they can reduce costs by repairing products instead of sending them to a landfill.</p>



<h2 class="wp-block-heading"><span id="Technology_streamlines_reverse_logistics">Technology streamlines reverse logistics</span></h2>



<p>Technology can help streamline reverse logistics in many ways. The first way is by <strong>tracking the movement of goods</strong>, so that companies can know where their products are at all times. This technology allows them to ensure that the product reaches its destination <strong>quickly</strong> and <strong>safely</strong>, thus reducing losses due to theft or damage during transport.</p>



<p><strong>Inspection technology also aids reverse logistics by making it easier to inspect goods</strong> when they are returned for repair or exchange. With this type of advanced inspection system, companies will be able to identify whether their returns need repair before sending them back into <strong>circulation</strong>. If there is no problem with the return, it can be sorted and repacked for direct shipment to its next destination without further human interaction (which reduces costs).</p>



<p>Finally, wiping <strong>technology</strong> has become increasingly popular due to its ability to speed up sorting activities and ensure that products remain clean throughout the process, which prevents <strong>contamination</strong> between items and creates more efficient processes overall.</p>



<h2 class="wp-block-heading"><span id="Tracking_technology_is_used_to_improve_customer_service">Tracking technology is used to improve customer service</span></h2>



<p>Tracking technology is used to <strong>improve logistics</strong>. This can be seen through the use of <strong><a href="https://api.novocargo.com/en/logistics-tracking-number-shipment-parcels/" data-type="post" data-id="4085">GPS tracking</a></strong> devices on trucks so that dispatchers can locate their drivers and monitor their progress in real time as they move goods from one location to another. </p>



<p>Tracking technology also allows companies to <strong>monitor</strong> their <strong>shipments</strong> as they are transported from one location to another (which helps prevent accidents or delays), and provides <strong>information</strong> on where delays may occur before they happen, so that preventative measures can be taken in advance (such as rerouting).</p>


Guy working Edith boxes in reverse logistics

Reverse logistics examples in 2022


<p><strong>Safety stock </strong>is an important part of the business, but it also requires costs. A good alert system is necessary to minimize stock loss and avoid losses when inventory is below the optimal level. <strong>Efficiency</strong> allows us to evaluate cost reduction opportunities and optimize our safety investment by maximizing ROI.</p>


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                <span class="lwptoc_item_label">Safety stock is important, but it also requires costs</span>
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                <span class="lwptoc_item_label">Stock levels can be difficult to adjust</span>
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                <span class="lwptoc_item_label">A good alerting system is necessary</span>
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    </div><div class="lwptoc_item">    <a href="#Productivity_and_quality">
                    <span class="lwptoc_item_number">4</span>
                <span class="lwptoc_item_label">Productivity and quality</span>
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    </div><div class="lwptoc_item">    <a href="#Maximize_ROI">
                    <span class="lwptoc_item_number">5</span>
                <span class="lwptoc_item_label">Maximize ROI</span>
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<h2 class="wp-block-heading"><span id="Safety_stock_is_important_but_it_also_requires_costs">Safety stock is important, but it also requires costs</span></h2>



<p>Safety stock is important, but it also requires costs. Generally, safety stock is defined as the level of <strong>materials and products</strong> that are needed to meet a given demand in a specific period. The cost of safety stock can be a significant source of expense for companies; however, there are ways to minimize it. </p>



<p>While there are several ways to <strong>optimize</strong> safety stock (e.g., by selling or rejecting orders), there are the following tools: market behavior <strong>budgeting</strong> and <strong>planning</strong>; estimated budgeting based on historical data; computer systems for statistical inventory management (<strong>SIGEI</strong>)-programs slightly adapted for use in small businesses. All of these help to minimize the costs associated with stock and improve its utilization within the organization.</p>



<h2 class="wp-block-heading"><span id="Stock_levels_can_be_difficult_to_adjust">Stock levels can be difficult to adjust</span></h2>



<p>In order to adjust the level of stock, you need to know three things:</p>



<ul>
<li>Your demand (the number of units you sell per period)</li>



<li>The lead time (how long it takes to get a new unit from your supplier)</li>



<li>The safety <a href="https://api.novocargo.com/en/raw-material-inventory-what-does-it-refer-to/" data-type="post" data-id="5852">stock</a> (the number of extra units you need in case some fail or are damaged)</li>
</ul>



<p>The first two factors are easy to determine as they are fixed and known. The third factor depends on the service level that is desired by your customer-if they want fast delivery, then you should have more safety <strong>stock</strong> and less <strong>inventory</strong>. If they are happy with longer <strong>delivery</strong> times, then having less safety stock means lower costs for holding inventory.</p>



<h2 class="wp-block-heading"><span id="A_good_alerting_system_is_necessary">A good alerting system is necessary</span></h2>



<p>A good alerting system is the key to your inventory management system. It’s all about <strong>visibility</strong>, so you need to be able to be able to see what’s going on with each item and its location in real time (or as close as possible).</p>



<p><strong>Alerts are important because they let you know when something goes wrong. </strong>They can be actionable or passive depending on the situation, but what matters most is that they’re timely and informative. If an alert doesn’t trigger until after a problem has occurred, then it won’t actually help much in preventing future issues from occurring! </p>



<p>That’s why it’s important for alerts to include visual representations of data or other <strong>helpful information</strong> like instructions on how best to go about resolving the issue at hand before addressing other problems with similar root causes later down the road.</p>



<figure class="wp-block-image size-large is-resized"><img decoding="async" loading="lazy" src="https://api.novocargo.com/wp-content/uploads/2022/11/supervisor-manager-male-engineer-worker-wears-uniform-working-hand-use-laptop-stock-checking-in-store-warehouse-shipping-industrial-team-with-safety-helmet-checking-quantity-of-product-on-shelf-min-1024x554.jpg" alt="Two men working in a warehouse" class="wp-image-5888" width="1365" height="738" srcset="https://api.novocargo.com/wp-content/uploads/2022/11/supervisor-manager-male-engineer-worker-wears-uniform-working-hand-use-laptop-stock-checking-in-store-warehouse-shipping-industrial-team-with-safety-helmet-checking-quantity-of-product-on-shelf-min-1024x554.jpg 1024w, https://api.novocargo.com/wp-content/uploads/2022/11/supervisor-manager-male-engineer-worker-wears-uniform-working-hand-use-laptop-stock-checking-in-store-warehouse-shipping-industrial-team-with-safety-helmet-checking-quantity-of-product-on-shelf-min-300x162.jpg 300w, https://api.novocargo.com/wp-content/uploads/2022/11/supervisor-manager-male-engineer-worker-wears-uniform-working-hand-use-laptop-stock-checking-in-store-warehouse-shipping-industrial-team-with-safety-helmet-checking-quantity-of-product-on-shelf-min-768x415.jpg 768w, https://api.novocargo.com/wp-content/uploads/2022/11/supervisor-manager-male-engineer-worker-wears-uniform-working-hand-use-laptop-stock-checking-in-store-warehouse-shipping-industrial-team-with-safety-helmet-checking-quantity-of-product-on-shelf-min-1536x831.jpg 1536w, https://api.novocargo.com/wp-content/uploads/2022/11/supervisor-manager-male-engineer-worker-wears-uniform-working-hand-use-laptop-stock-checking-in-store-warehouse-shipping-industrial-team-with-safety-helmet-checking-quantity-of-product-on-shelf-min-2048x1107.jpg 2048w" sizes="(max-width: 1365px) 100vw, 1365px"></figure>



<h2 class="wp-block-heading"><span id="Productivity_and_quality">Productivity and quality</span></h2>



<p>Companies that have achieved a high degree of operational and productive efficiency have the <strong>ability to analyze and understand the real impact that each investment has on their results.</strong> Therefore, they are able to identify where there is room for inventory optimization and establish the necessary corrective policies.</p>



<h2 class="wp-block-heading"><span id="Maximize_ROI">Maximize ROI</span></h2>



<p>To maximize <a href="https://www.investopedia.com/terms/r/returnoninvestment.asp" target="_blank" rel="noreferrer noopener">ROI</a>, it is necessary to optimize inventory through the use of appropriate software. The use of inventory management software is a crucial element for the proper <strong>management of stock </strong>and all that goes with it (computers, space, personnel). It is also closely related to other areas such as warehousing and transportation costs.</p>



<p><strong>But what does it mean to optimize?</strong> That’s where the problems lie: in many cases things have not been done properly and the result is expired products or products in poor condition or overstocked or missing products. The key to achieving this is two tools: a <strong>proper IT system </strong>and a continuous improvement plan based on real figures.</p>


Two men working on satefy stock in warehouse

How to optimize the safety stock?


<p>We know that raw material is the set of elements, inputs or basic and <strong>indispensable materials required by the company for its transformation</strong>, so that we can obtain a finished product from it. That is to say, the raw material <strong>inventory</strong> is the basic food in the productive process of the elaboration of a final product</p>


<div class="lwptoc lwptoc-autoWidth lwptoc-baseItems lwptoc-light lwptoc-notInherit" data-smooth-scroll="1" data-smooth-scroll-offset="24"><div class="lwptoc_i">    <div class="lwptoc_header">
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    <div class="lwptoc_itemWrap"><div class="lwptoc_item">    <a href="#Types_of_raw_material_inventory">
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                <span class="lwptoc_item_label">Types of raw material inventory</span>
    </a>
    </div><div class="lwptoc_item">    <a href="#Safety_stock">
                    <span class="lwptoc_item_number">2</span>
                <span class="lwptoc_item_label">Safety stock</span>
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<p>The term stock, inventory, existence or merchandise refers to the<strong> quantity of a certain product stored in a company.</strong> It represents the maximum amount stored, which will depend not only on the costs of storing the product but also on the physical space available and the type of product being stored</p>



<p>The Raw Material that makes up the <strong>Stock</strong> of a company is <strong>composed</strong> of all the <strong>materials</strong> that will be necessary in the production process to obtain the final product, now merchandise, that will reach the final consumer or simply be part of another industrial process.</p>



<h2 class="wp-block-heading"><span id="Types_of_raw_material_inventory">Types of raw material inventory</span></h2>



<p>Thus a processed Raw Material can be transformed into a final product by itself or into a Raw Material product of another more elaborated process to obtain another product. Therefore, the Stock or inventory of Raw Materials is one of the different types of inventory that <strong>are defined according to: its form or according to the characteristics</strong> of the product or the category in which it is included. In this way, we have inventories of Raw Materials, inventory of Products in Process and also inventory of Finished Product.</p>



<p>It should be noted that the definition of <strong>Inventory</strong> refers to the <strong>balance</strong> <strong>of goods held by a company </strong>or legal entity, or a natural person, specifically referring to a company’s stock. Thus it is the set of elements or products that the company acquires to process them or simply to place them for sale in the market.</p>



<p>We make it very clear then that the Raw Material is the product that <strong>will be the object of a transformation process </strong>to become a final good or a consumer good after being subject to the manufacturing chain.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="671" src="https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-1024x671.jpg" alt="warehousing - raw materials inventory" class="wp-image-4708" srcset="https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-1024x671.jpg 1024w, https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-300x197.jpg 300w, https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-768x503.jpg 768w, https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-1536x1006.jpg 1536w, https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-2048x1342.jpg 2048w" sizes="(max-width: 1024px) 100vw, 1024px"></figure>



<p>It is also very important to know that inventory is part of the company’s core business. That is, only the <a href="https://api.novocargo.com/en/raw-materials-in-2022/" data-type="post" data-id="5791">Raw Material</a> that is used in the company’s production process.</p>



<p>The <strong>existence or inventory of the Raw Material will be subject to a continuous and adequate control</strong> just like any of the other inventories that make up a <strong>company</strong>. One of the purposes of inventory control is to avoid the loss of raw materials, which can cause losses to the company.</p>



<p>You can have a <strong>periodic</strong> <strong>inventory</strong> <strong>control</strong> of <strong>raw materials</strong>, perpetual control or real-time control, each one represents an investment and a different mechanism for the company and will depend on the type and availability of the same and the amount and value of the existence that the company has.</p>



<p>In this way we can say that the larger and less valuable the <strong>inventory</strong>, the more expensive it will be to monitor or control it permanently and vice versa.</p>



<h2 class="wp-block-heading"><span id="Safety_stock">Safety stock</span></h2>



<p>Now we can talk about <a href="https://www.zoho.com/inventory/guides/what-is-safety-stock.html" target="_blank" rel="noreferrer noopener">safety stock</a>, what does this refer to?</p>



<p><strong>Safety stock</strong> consists of having an extra product, in this case raw materials in the warehouse, in order to be prepared to face any unforeseen event in the market. Either by: a <strong>production</strong> problem of origin of the raw material, by an increase in demand for things that do not correspond to you as a company or as has been experienced lately in the post pandemic months by a delay in the distribution worldwide.</p>


Raw material inventory: what does it refer to?


<p>What is an <strong>inventory</strong>? We know that an inventory is a specifically <strong>organized and detailed</strong>, ordered and valued list of the elements that make up the assets of a company. Now the main objective of inventory control is to guarantee the availability of a product required by a customer when and how the customer needs and wants it.</p>



<p>For this reason if there is an adequate and <strong>timely inventory control the company can respond quickly to the needs</strong> and requirements of its customers while controlling the costs associated with maintaining the stock.</p>


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                <span class="lwptoc_item_label">The importance of inventory control</span>
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                <span class="lwptoc_item_label">Some mechanisms to achieve this objective are</span>
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<h2 class="wp-block-heading"><span id="The_importance_of_inventory_control">The importance of inventory control </span></h2>



<p>The importance lies in being able to <strong>maintain the correct stock balance of products </strong>in the warehouse which avoids losing a sale for not having enough inventory to complete an order or losing products due to excess <a href="https://www.investopedia.com/terms/s/stock.asp" target="_blank" rel="noreferrer noopener">stock</a>.</p>



<p>For this reason inventories are nothing more than the process of knowing the <strong>assets</strong> that can be marketed by companies whose origin is in the <strong>knowledge</strong> of the items that are owned in the location of the same and the value of each one and the <strong>possibilities</strong> of its displacement depending on the demand.<br>In this way we can derive that the main purpose of inventories in logistics is to provide companies with the basic materials for their continuous and <strong>optimal operation.</strong></p>



<p>Inventory is for companies one of the most important assets in the flow of <strong>internal processes, </strong>from here we understand inventory as one of the management and <strong>control</strong> <strong>systems</strong> that covers the registration of all movements of raw materials, merchandise and other goods of an organization.</p>



<figure class="wp-block-image size-large is-resized"><img decoding="async" loading="lazy" src="https://api.novocargo.com/wp-content/uploads/2020/09/16619-min-1024x683.jpg" alt="guys working with a pallet in a warehouse doping inventory" class="wp-image-4414" width="824" height="549" srcset="https://api.novocargo.com/wp-content/uploads/2020/09/16619-min-1024x683.jpg 1024w, https://api.novocargo.com/wp-content/uploads/2020/09/16619-min-300x200.jpg 300w, https://api.novocargo.com/wp-content/uploads/2020/09/16619-min-768x512.jpg 768w, https://api.novocargo.com/wp-content/uploads/2020/09/16619-min-1536x1024.jpg 1536w, https://api.novocargo.com/wp-content/uploads/2020/09/16619-min-2048x1365.jpg 2048w" sizes="(max-width: 824px) 100vw, 824px"></figure>



<p>For this reason <strong>when the inventory control is unbalanced is really catastrophic </strong>for the operation of the different areas in the supply chain will be difficult to know accurately the input and output of assets exposing the lack or excess of raw materials or materials as well as the increase of additional costs by the differences between profits and losses. </p>



<p>For which we must know the <strong>functions and purposes of inventories </strong>this is of utmost importance in order to avoid possible failures in the internal and external operations of our company. We also need a good inventory control to boost internal operations and thus provide better service to <strong>consumers</strong>.</p>



<p>In this way the management of inventories in logistics is in charge of <strong>facilitating the entry and exit of products to the warehouse</strong>, their classification, their location and their correct storage, the transit must be efficient because this has a direct impact on the performance of the company.</p>



<p>Therefore it is necessary to have an efficient administration to achieve an adequate and timely <strong>inventory management </strong>in logistics, allowing in turn to determine the manner and time of delivery of the goods marketed by our company.</p>



<h2 class="wp-block-heading"><span id="Some_mechanisms_to_achieve_this_objective_are">Some mechanisms to achieve this objective are</span></h2>



<ul><li><strong>Inventory control policy: </strong>it lies in being able to know the amount of raw material, packaging or containers that the company has available.</li><li><strong>Short-term sales projection: </strong>having clear projections will provide the possibility of planning the purchases and production of each product, also allowing to know when it will be necessary to invest and reduce the waste of materials or inputs.</li><li><strong>Number, size and location of storage points:</strong> the organization and order of the inventory facilitates the task of classification and provides an impeccable environment that in turn will be easier to locate each work item, thus gaining time and efficiency.</li><li><strong>Relationship of products in <a href="https://api.novocargo.com/en/slotting-warehouse-productivity/" data-type="post" data-id="5465">warehouses</a>: </strong>The handling and storage of products in logistics inventory management raises the cost of the final delivery, so it is extremely important to have a correspondence between the types of products stored and their entry and exit.</li></ul>


senior businessman doing inventory in warehouse

Logistics and the importance of inventory control


<p>We will try to define what a global supply chain is, also called a<strong> global supply chain</strong>. Global supply chains are varied, dynamic and complex organizational structures that are constantly evolving <strong>in order to adapt to the requirements of the global market</strong>. They are also described as global production networks or global value chain.</p>





<p>Consequently, we can say that all the terms used refer to the same thing. In other words, t<strong>hey deal with the same basic aspects of production and trade across or beyond borders</strong>. They are therefore considered synonymous.</p>



<p>Thus, global supply chains have become the usual, common, <strong>everyday way of organizing investment</strong>, production and marketing of products worldwide. What defines a globalized economy.</p>



<p>A <strong>cross-border organization</strong> whose main activity is to produce goods and services and get them to consumers, making use of different inputs development and production <strong>stages</strong> <strong>plus</strong> <strong>the</strong> <strong>delivery</strong> and provision of those services, is a global supply chain or global supply chain.</p>



<h2 class="wp-block-heading"><span id="Elements_of_the_global_supply_chain">Elements of the global supply chain</span></h2>



<p>All activities carried out by global supply chains are <strong>governed</strong> by <strong>regulations</strong> established in the <strong>Declaration on Multinational Enterprises</strong> as an instrument of protection and constitution of the ILO (International Labor Organization), which also created the <strong>World Commission on the Social Dimension of Globalization.</strong></p>



<p>The elements that make up the global supply chain are:</p>



<ul><li>Supervision of raw material procurement.</li><li><a href="https://www.techtarget.com/searcherp/definition/process-manufacturing" target="_blank" rel="noreferrer noopener">Product manufacturing process.</a></li><li>Production.</li><li>Distribution and transportation.</li><li>Delivery.</li></ul>



<p>The global supply chain is made up of:</p>



<ul><li>Suppliers.</li><li>Transportation.</li><li>Manufacturers.</li><li>Customer.</li><li>Communication.</li><li>New <a href="https://api.novocargo.com/en/software-and-new-technology-in-logistics/" data-type="post" data-id="5555">technologies</a>.</li></ul>



<p>Now, we can say that the importance of the <strong>global supply chain</strong> lies in the <strong>relationship</strong> and <strong>interdependence</strong> that is generated between its elements from the origin of the product or service to the final consumer.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="706" src="https://api.novocargo.com/wp-content/uploads/2021/08/9BAC00C3-8A6B-4158-BE0E-BB3BFC45CB60-1024x706.jpeg" alt="Cargo - intermodal transport" class="wp-image-5438" srcset="https://api.novocargo.com/wp-content/uploads/2021/08/9BAC00C3-8A6B-4158-BE0E-BB3BFC45CB60-1024x706.jpeg 1024w, https://api.novocargo.com/wp-content/uploads/2021/08/9BAC00C3-8A6B-4158-BE0E-BB3BFC45CB60-300x207.jpeg 300w, https://api.novocargo.com/wp-content/uploads/2021/08/9BAC00C3-8A6B-4158-BE0E-BB3BFC45CB60-768x529.jpeg 768w, https://api.novocargo.com/wp-content/uploads/2021/08/9BAC00C3-8A6B-4158-BE0E-BB3BFC45CB60-1536x1058.jpeg 1536w, https://api.novocargo.com/wp-content/uploads/2021/08/9BAC00C3-8A6B-4158-BE0E-BB3BFC45CB60-2048x1411.jpeg 2048w" sizes="(max-width: 1024px) 100vw, 1024px"></figure>



<p>If we can guarantee the <strong>supply</strong> <strong>chain</strong>, we have been able to guarantee the satisfaction of the customer’s need for the product he/she <strong>purchased</strong> and <strong>expects</strong> to receive in perfect condition, on time and in a timely manner. Some examples of global supply chains are:</p>



<ul><li>Cisco Systems, in number 1</li><li>Schneider Electric, at number 2</li><li>Colgate-Palmolive, at number 3</li></ul>



<p>We have taken these examples from Gartner Suppy Chain Top 25 of 2022.</p>



<p>We should note that after a year of great challenges for supply chains where <strong>flexibility</strong> and <strong>agility</strong> became the differentiating qualities that enabled them to meet the challenges of the pandemic. In addition to other <strong>macroeconomic</strong> factors, we can see that supply chains go beyond simply executing and designing efficient logistics. They also fulfill the purpose of their organization:</p>



<ul><li>They understand and value their customers.</li><li>They invest in technology that drives them to develop resilience, agility and innovation.</li><li>They promote innovation and celebrate and celebrate successes in relation to ESG (Environmental, Social &amp; Governance) criteria.</li></ul>



<p><strong>Cisco Systems</strong> has designed a virtual supply chain in which <strong>physical</strong> <strong>manufacturing</strong> and <strong>logistics</strong> are <strong>outsourced</strong> to specialized and physical logistics are outsourced to specialized companies, i.e. specialist manufacturers and third-party logistics companies.</p>



<p>This keeps it as one of the world leaders in the <strong>networking</strong> and <strong>telecommunications</strong> market. Cisco has enabled the development of a highly synchronized network of partners worldwide that acts in a coordinated manner as if it were a single business. It is also noted that the use of information and information <strong>technology</strong> <strong>to</strong> <strong>improve</strong> <strong>responsiveness</strong> <strong>to</strong> <strong>customers</strong> is the common denominator among successful companies. </p>


5 examples of the global supply chain


<p>We begin by defining <strong>raw materials </strong>as materials that we obtain directly from nature, i.e., <strong>natural</strong> <strong>resources</strong> that are useful and valuable to man. Raw materials can be of the following <strong>origin</strong>: animal (wool, silk, fur), vegetable (plants, seeds, wood), mineral (sand, marble, iron) and fossil (natural gas, oil, coal).</p>





<p><a href="https://api.novocargo.com/en/supply-chain-responsible-targets-2022/" data-type="post" data-id="5682">Raw materials</a> are all those materials that have not been subjected to transformation processes but are found in their natural state, which is why they are the first link in the <strong>production chain</strong>. They are of vital importance for the production of food, energy, consumer goods and others, i.e. for the economic development of a country.</p>



<p>The strong economic contraction caused by the <a href="https://en.wikipedia.org/wiki/COVID-19_pandemic" target="_blank" rel="noreferrer noopener">SARS-COV-2 </a>virus health crisis and all that was involved in facing a pandemic and all the restrictions taken in the countries in order to protect themselves resulted in an unusual increase in the price of raw materials, this from mid-2020.</p>



<p>In addition, a sharp rise in energy prices began in Europe in 2021. Coal, gas and oil recorded unusual <strong>variations</strong> during the year. This is due to the low post-winter gas inventory in <strong>Europe</strong>, the high demand generated by the post-pandemic economic recovery, the increase in greenhouse gas emissions, as well as the structure of the energy market within Europe.</p>



<p>This <strong>energy</strong> and <strong>commodity</strong> situation is further complicated by Russia’s invasion of Ukraine. Triggering after four months of conflict a scenario of uncertainty where commodity price estimates are totally out of whack.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="671" src="https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-1024x671.jpg" alt="warehousing - raw materials" class="wp-image-4708" srcset="https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-1024x671.jpg 1024w, https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-300x197.jpg 300w, https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-768x503.jpg 768w, https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-1536x1006.jpg 1536w, https://api.novocargo.com/wp-content/uploads/2020/11/cargo-boxes-storing-at-warehouse-shelves-P7R6YYC-min-2048x1342.jpg 2048w" sizes="(max-width: 1024px) 100vw, 1024px"></figure>



<h2 class="wp-block-heading"><span id="Raw_materials_and_economy">Raw materials and economy </span></h2>



<p>It is very difficult to estimate or predict prices as this transcends the economic realm into geopolitics. All this implies a rise in inflation worldwide during the months of 2022, which in turn negatively affects many or almost all <strong>productive</strong> sectors in the surrounding countries and some in the <strong>globalized</strong> world where we operate through foreign trade or international logistics.</p>



<p>Now, according to <strong>several studies</strong>, the prices of raw materials are beginning to show worrying signs of a global recession. Basically because so far this year the price of materials such as aluminum, copper and steel have fallen.</p>



<p>Unlike what is happening with <strong>raw materials of energy or fossil origin such as oil or natural gas</strong>, which are still at very high or distorted prices caused by the war in Ukraine and the sanctions against Russia, which means that industrial raw materials have been showing notable weakness for several months. We can also observe that raw materials of vegetable origin or agricultural raw materials such as palm oil have also fallen in price during this process.</p>



<p>In spite of all these <strong>falls in the prices </strong>of industrial or fossil raw materials and vegetable or agricultural raw materials, no clear trend has yet been defined regarding the use of oil or natural gas, some experts point out that the market is too altered and conditioned by the war in Ukraine and the sanctions against Russia.</p>



<p>However, <strong>there are analysts who point out that there is a positive side to this whole situation</strong> and that is that they will contribute to limit inflation, the negative side is the fall in prices and the recession in the countries producing raw materials, but it will contribute to mimic the progressive increase in world inflation.</p>


young woman doing inventory at a modern plant

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