Optimizing Your Supply Chain with Integrated Logistics Management

The field of logistics has always been a critical force shaping the success or failure of great endeavors. Wars have been won or lost purely on logistics efficiency, as evident with the British Army's struggles during the American War of Independence. Yet, it is only recently that businesses started grasping  the full power of logistics management for competitive advantage.

Integrated logistics management takes it up a notch by uniting procurement, transportation, storage, and information flows into a seamless process, optimizing both customer satisfaction and profitability.

But what is integrated logistics management, and how can businesses harness its full potential? This article provides a roadmap for implementing integrated logistics management and highlights why innovative software solutions are essential in today’s supply chain.

Key Components of Integrated Logistics Management

At the heart of integrated logistics is the use of supply chain technology to harness data and connectivity to eliminate operation inefficiencies. From enterprise resource planning (ERP) systems to internet of things (IoT) applications, cloud-based technology connects different systems—transportation management systems, inventory databases, order fulfillment software, and more—enabling real-time visibility and automation across the entire supply chain.

Integrated logistics management involves several key technology components working together to streamline your logistics and supply chain operations. These components include:

Warehouse Management Systems

Warehouse management is one of the core components of integrated logistics management, involving the day-to-day processes used to manage operations within a warehouse. This includes receiving products, warehouse space utilization, labor management, inventory management, and fulfilling orders—all of which aids the seamless flow of goods from warehouses to their final destination.

In the context of integrated logistics, warehouse management systems (WMS) can link various components of the supply chain, integrating seamlessly with transportation management systems (TMS), order fulfillment processes, and inventory management systems. Ensuring strategic warehousing strategies and efficient distribution networks to give businesses a competitive advantage, WMS can enable next-day or even same-day delivery options, meeting the rising expectations of today's consumers. For businesses, this translates to an enhanced customer experience, improved brand loyalty, and ultimately, stronger bottom-line results.

Transportation Management Systems

Transportation management plays an integral role in the supply chain, moving products through a complex chain of suppliers, warehouses, and customers. Businesses can use TMS for selecting transportation modes, communicate with carriers, dock scheduling, ensuring compliance with regulations, and optimizing routes. Route optimization involves using advanced software and algorithms to determine the most efficient routes considering factors like distance, traffic, supplier locations, and pickup schedules, thereby improving travel & delivery times as well as fuel cost savings. When a transportation management system is integrated with other logistics functions (like WMS, inventory management, and order fulfillment), it minimizes the need for safety stock, freeing up capital and warehouse spaces.

Also, in an era of increasing environmental sustainability, transportation management through route optimization (like with milk runs) can help reduce a company's carbon footprint. What is a milk run in logistics? Milk runs derive its name from a milkman's route and are a strategy where a single truck or vehicle makes multiple stops along a predetermined route, for example, to pick up raw materials from various suppliers. This type of route optimization consolidates pickups, reducing the need for multiple trucks while balancing fuel consumption.

Inventory Management Software

At the core of any integrated logistics strategy is inventory management. It’s the art of making sure the right products are available in the right quantities at the right time. Inventory management plays a role in balancing supply and demand, working closely with procurement to maintain adequate stock levels.

When your inventory management software (IMS) is integrated with other components of integrated logistics management such as WMS and TMS, it lowers operating costs by preventing overstocking and minimizing stock outs that could hurt sales. Modern software solutions like Extensiv enhance this integration with easy data exchange, which enables predictive forecasting and inventory optimization. In today’s omnichannel environment, integrated inventory management is a competitive differentiator, supporting strategies like drop-shipping and vendor-managed inventory.

Order Management Systems

Order processing is the link between customer demand and supply chain execution. Besides recording sales, it initiates a series of activities across logistics functions, from inventory management to transportation planning. Order management systems (OMS) act like a central nervous system of the supply chain, communicating stock requirements, triggering warehouse operations, and initiating transportation for timely deliveries. When order processing and management are fully integrated, it reduces lead times, minimizes errors, and increases operational efficiency.

Systems Integrations

Connected systems via integrations are essential in integrated logistics, creating a responsive and resilient supply chain. This goes beyond simple coordination—supply chain collaboration aligns processes and goals among suppliers, manufacturers, and distributors for maximum efficiency.

Collaboration also enhances forecasting, inventory management, and transportation efficiency by facilitating real-time data analytics, information sharing, and transparency. Technology platforms like Extensiv are a fitting example of a technology platform that streamlines collaboration by sharing visibility into key performance indicators (KPIs) and metrics on inventory and orders and fostering seamless communication and decision-making across the supply chain. Collaboration—especially between third-party logistics (3PL) providers and their clients—helps lower costs, improve service levels, and increase innovation by leveraging diverse perspectives.

How to Implement Integrated Logistics Management

Implementing integrated logistics management requires strategic thinking, understanding your problem areas & goals, and bringing your entire team on the journey. Below are some practical tips businesses should follow to implement integrated logistics management effectively:

• Audit all existing processes, keeping your goals in mind. Any areas of deficiencies should be singled out and considered. Then, build a clear use case for the model that illustrates how the integrated logistics model will improve problem areas, ensure consumer satisfaction, improve operational processes.
• Re-evaluate your current situation and prepare for the upgrade. Shop around for integrated logistics solutions, comparing multiple providers and products so you can ascertain the best fit for your needs and your team.
• Perform an initial data scan across all systems. Remember that success of integrated logistics in supply chain management depends on team collaboration and information flow; if data gets stuck in one of your logistics systems, you will need to address this bottleneck before this model is feasible for your operations.
• Determine the critical KPIs that align with your business objectives. These should include metrics across different stages of your operations, such as inventory & order accuracy and on-time delivery. Set clear, measurable targets for each KPI.
• Test and refine your integrated logistics processes. Before initiating a full-scale rollout, experiment with small-scale pilot projects. Analyze results, gather feedback, and make necessary adjustments.
• Evolve your integrated logistics strategy over time. As your business needs and market conditions change over time, your integrated logistics strategy will need to adapt with your processes.

Why do businesses use integrated logistics management?

The integrated logistics management model is crucial in the modern supply chain and commerce landscape for delivering a positive experience to customers, whether as a logistics provider, a private warehouse, or an ecommerce brand working with a 3PL.

Consumers no longer just expect fast shipping; they demand a seamless experience at all times. After surveying 14,300 consumers and business buyers globally, Salesforce reports that 79% expect consistent interactions across departments. However, most respondents (55%) say it feels like they're communicating with separate departments rather than with one company.

Integrated logistics breaks down departmental silos, fosters cross-functional communication and collaboration, improves operational efficiency, and reduces costs by streamlining various supply chain functions. This not only helps you exceed customer expectations and build long-term loyalty but also gain a competitive edge.

For example, integrating procurement with order fulfillment enables a business to implement different techniques like cross-docking and a just-in-time inventory strategy. With cross-docking, goods move directly from the supplier to the customer or another mode of transit, eliminating the need for warehousing and reducing labor and storage costs.

The end result of all your supply chain partners, technology, and teams working together is visibility and accurate data, allowing you to meet customer demand faster.

Supply chain visibility helps you replenish stock on time, preventing overstock and stockout situations. It also provides critical support when dealing with omnichannel fulfillment and multi-channel sales. When selling on multiple channels from one inventory pool, it's easy to oversell without a tool that provides end-to-end visibility like Extensiv. Extensiv helps track inventory levels in real-time across all sales channels, reducing the risk of overselling and ensuring accurate order fulfillment.

When selling on multiple channels from one inventory pool, it's easy to oversell without a tool that provides end-to-end visibility like Extensiv. Extensiv helps track inventory levels in real-time across all sales channels, reducing the risk of overselling and ensuring accurate order fulfillment.

Ecommerce merchants looking to reap all the benefits of integrated logistics management should also consider outsourcing fulfillment to a logistics provider that can provide the technology, warehousing, and fulfillment expertise needed for success. You don’t have to do everything yourself; explore Extensiv’s Fulfillment Marketplace to find the perfect partner so you can free up time to focus on other parts of your business.

Real-World Examples of Integrated Logistics Management

To guide you further, we are going to discuss some businesses that have implemented and reaped the benefits of the integrated logistics model such as revenue growth, customer satisfaction, and operational efficiency:

Amazon has perfected logistics system integration using end-to-end automated and efficient supply chain management—including warehousing, order processing, and delivery. The ecommerce giant uses advanced technologies like robotics and machine learning (ML) to streamline their logistics operations with maximum efficiency, which is why customers love them.

According to the American Customer Satisfaction Index (ACSI) 2023 Retail Holiday Preview, Amazon ranked the highest for customer satisfaction among all retailers with an ACSI score of 83. Scot Hamilton, the vice president of Amazon’s Planning and Routing Technology, highlights Amazon’s use of artificial intelligence (AI) as a key tool for ensuring faster deliveries to customers globally. For example, during the 2023 Cyber Week, Amazon used their inventory management system to forecast a daily demand of over 400 million products by predicting where the orders were coming from using vast amounts of historical data.

Amazon's integrated logistics management is a powerful combination of technology, infrastructure, and customer-centricity that lays the foundation for their overall efficiency. It allows the company to manage massive volumes of orders, provide fast and reliable delivery, and maintain high levels of customer satisfaction, setting a new standard for ecommerce logistics. During the second quarter of 2024, Amazon generated total net sales of nearly $148 billion, surpassing the $134 billion benchmark from the same quarter in the previous year.

You might not have heard about Bulu, but you’ve definitely heard of their clients—including Pepsi, Disney, and American Express. A 3PL specializing in navigating complex logistics solutions, Bulu Group provides customized subscription and fulfillment for their clients.

When they tried scaling their operations, they experienced challenges due to the lack of a consolidated fulfillment technology stack. In the past, Bulu ran a patchwork of siloed systems to meet individual customer requirements, including an excel-style self-engineered solution.

To conquer these challenges, Bulu decided to implement a cloud-based solution. Using Extensiv solutions, they unified all their warehouse management, order fulfillment, and integrations with their customers’ systems. Bulu uses SmartScan, Small Parcel Suite, billing automation, and the client portal & dashboard (one of their favorites) features within Extensiv 3PL Warehouse Manager to increase accurate, real-time visibility of inventory at every stage of the logistics process. They also love how much easier customer onboarding has become using Extensiv Integration Manager.

After implementing Extensiv’s solutions, their labor effiency increased by 25%, decreasing labor costs by the same percentage. Similarly, by linking their customer billing within the WMS to QuickBooks automatically, Bulu has cut monthly and bimonthly billing time in half, saving approximately $75,000 annually in hiring and staffing costs.

Maximize Your Integrated Logistics Management with Extensiv

With so many moving parts in supply chain and logistics management, getting everything working together seamlessly is critical for both your customers and your bottomline. Extensiv can help you bring everything under one roof with our comprehensive solutions for brands and solutions for 3PLs.

Want to see how our software can work for your business? Request a demo today!