As the CEO of a company that offers products or services to consumers, it’s essential to become very good at logistics. This will not only keep customer’s satisfied, but make your business one of the top performers in your industry.
Why Logistics Is Important
In essence, astute logistics management helps your company handle all the changes happening in your organization, network, and industry. In fact, the bigger and more complex the structure and operations of your company, the more skilled you have to be with understanding core logistic strategies.
Understanding logistics will also ensure the success of your business if your service is very fluid and fluctuates due to seasonal variations or market demands. It is also invaluable if your business has specific products or sells to specific cities, states or countries.
What Should You Focus On?
Since logistics by its very nature is complicated, what should a logistics professional focus on to be most effective?
Here are four suggestions:
- 1. Focus on identifying structural improvements. This will increase the speed of production.
- 2. Focus on minimizing all associated costs of delivering your products to consumers.
- 3. Focus on identifying the most important objective for your business. Then focus on what logistics you have to get right to contribute to that objective.
- 4. Focus on creating an overall logistics strategy, then decide on the best tactics to roll out that strategy.
3 Key Areas To Improve Your Logistics Strategy
While there are numerous areas you could develop a solid logistics strategy, here are three key areas that many businesses tend to overlook:
- Leveraging predicted volumes to reduce pricing.
Unless you have a transportation and logistics historic volume to fall back on, it is difficult to find providers who will offer your business the service levels you need at a competitive price.
Knowing your predicted volumes can help your business get significant discounts because you are able to give a service provider consistently reliable information when it comes to estimating regular freight costs. For instance, if you contacted air freight services from Unigroup, you would be able to arrange the most cost-effective solutions for air cargo shipping.
- Practice logistics driven by demand. Your business can reduce how much it pays in transportation costs, when you can match demand with supply. You will not only be efficient in your use of inventory storage and retrieval, but also provide much better customer service.
- Improve Sales and Operations Planning (S&OP).
Most businesses have the following primary divisions:
- · Sales
- · Marketing
- · Product Management
- · Manufacturing
- · Warehousing
- · Procurement
- · Finance
- · Transportation
Each of these functional divisions has its own demands, constraints, and schedules. Yet although each may feel that it is operating as an independent unit of the organization, it has to interface with all the other units as well. By holding regular discussions between each of these departments to discuss, plan, and review business activities, it will be possible to improve all aspect of S&OP.
Maximizing your business production will improve its profitability. All this depends on developing a well-thought out and thoroughly-tested logistics strategy.