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Logistics Key Terms Every Industry Professional Needs to Know

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The field of transportation and logistics is highly competitive. International and domestic companies vie for their share of the roughly $1.5 trillion industry that is integral to the movement of materials and consumer goods. Air, freight rail, trucking, and maritime transport are all included under the umbrella of logistics, and each has its own supply chains that ensure goods and raw materials are available. To work effectively within the logistics industry, it is important that fleet managers use proper logistics vocabulary. Some concepts and terms are more widely applicable, while others are niche-specific, but these five are some of the most important key terms essential to the larger industry.

Supply Chain Management

Supply chains act as networks between suppliers and a company to develop and distribute a specific product. There are many steps taken and elements involved in a supply chain to deliver a product or service to a customer including research and development, sourcing, production, logistics and IT systems. Supply chain management (SCM) is the act of managing the supply chain elements to achieve the maximum value and maintain the highest level of efficiency at minimum cost. Those who manage supply chains oversee physical materials, information and finances. They maintain the flow of materials and information through the supply chain.

Within logistics, a fleet manager will use information systems to effectively maintain and track their fleet of commercial vehicles as they carry products through the physical flow of the supply chain.

Demand-Driven Logistics

Demand-driven logistics is the application of data on fluctuating fuel costs, supply chain disruptions and labor and capacity availability. Applying this data helps create a proactive supply chain by gaining a competitive edge to minimize costs and delays within the chain. Demand-driven logistics encourages supply chain managers to collaborate at different points to eliminate inefficiencies from the supply chain. This includes engaging suppliers and applying detailed consumer data to manipulate the supply chain for maximum efficiency. Supply chain visibility tools and transportation management systems (TMS) both provide valuable data for this process.

A fleet manager may apply principles of demand-driven logistics when dispatching fleet vehicles by analyzing shipping capacities and routes to maximize efficiency. The data allows managers to evaluate past performance and inefficiencies, such as revising insufficient delivery routes or combining inventory into a single vehicle rather than sending out two.

Telematics

Telematics may be a new concept within logistics  and it has proven to forever change the way companies manage and conduct their business. It is the application of telecommunication technology to send, receive and store data related to remote objects, like fleet vehicles. GPS fleet tracking technology, ELDs and mobile devices are all covered under the umbrella of telematics. This technology has allowed fleet managers to effectively and efficiently monitor deployed fleet vehicles to reduce costs, increase productivity, increase safety and improve the customer experience.

A fleet manager working for a courier may use telematics data to learn that heavy traffic has slowed a fleet vehicle out on a delivery and the estimated delivery time has been delayed 45 minutes. If necessary, this data may be made available to the recipient to allow them to adjust their timetable.

GPS Fleet Tracking

GPS fleet tracking is based on telematics technology that leverages global positioning systems connected to remote objects and uses satellite technology to transmit data regarding the object's location to a receiver. GPS fleet tracking systems gather and analyze data providing users insights to improve vehicle routing, manage fuel efficiency, maintenance costs, monitor driver behavior and track asset locations and conditions.

A commercial automotive insurance adjuster may be provided GPS fleet tracking data when reassessing a company's insurance premiums. Data that indicate safe driver behavior may positively impact a company's fleet vehicle insurance rate, whereas unsafe driver behavior may increase insurance costs.

Electronic Logging Devices

Electronic logging devices (ELDs) are computerized devices located in the cab of each fleet vehicle. The devices collect and transmit data including the vehicle ID, location, miles traveled and condition. They also provide driver-specific data such as hours of service (HOS) and on-duty/off-duty statuses. Replacing old systems of paper logs, ELDs ensure that all compliance expectations are met in real-time, cutting down on process inefficiencies by eliminating large amounts of paperwork and reducing human error. It has also allowed for the application of demand-driven logistics and revisions to the supply chain to increase efficiency.

A dispatcher may review driver ELD data to determine if a specific driver has enough remaining hours of service available to complete their current delivery. If not, they'll be taken off duty in order to remain in compliance with federal regulations set out by the Federal Motor Carrier Safety Administration, under the U.S. Department of Transportation.

These high-level concepts and logistics key terms are only the tip of the iceberg, and there's so much more you'll need to learn before becoming a logistics professional. To learn more about logistics key terms and vocabulary, check out the following logistics glossary resources:


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