What Is the Importance Of Logistics: A Guide
Businesses run for profit, and it is a chain of supplies that gets their goods to the buying public. This reliable movement of products has many moving parts, and each must operate sequentially to successfully deliver customer purchases.
Do you have a business and focus most of your attention on sales and marketing? Are you struggling with your logistics because it has not been your priority? Management is the key, and seeing it as vital to your operation will help you focus more on supply chain issues. Here are some key reasons for the importance of logistics.
What is logistics?
Logistics can be summed up in the 7 Rs. This represents:
Right Product
You must deliver exactly what your customer has ordered, according to colour, brand and size. You must be able to deliver to your customers not only what they want but also what they need.
Right Quantity
Understanding how products are purchased is important for your logistics. Some inventory may be listed as a single unit, but ships in boxes with multiple products inside or one unit may be a pallet full of boxed goods.
Right Condition
You want every item you ship to customers in perfect working condition. Even when used or refurbished, all your inventory must be inspected before leaving your shipping facility as a quality control measure.
Right Customer
The last thing you want is to deliver your products to the wrong person. This creates a backup in delivery and costs you money, along with an unsatisfied customer.
Right Price
There needs to be ongoing attention to unit margins and profitability ratios when selling your wares. Keeping competitive while maintaining your profitability is key to turning over your inventory, and you need to be ready to adjust prices based on geographic location and market fluctuations.
Right Place
A package delivered to the wrong place costs you money, regardless of whether you need to arrange pickup, redelivery, or replacement. A comprehensive tracking system will help avoid these errors and save you money.
Using Third-Party Logistics Frees You Up
Everyone has their strengths, and in your business, you have yours as well. You already wear many hats, and some fit comfortably, while others take some adjustment and working in.
Consider using a third party logistics provider. Having partners in your storage and transportation lets you concentrate on where your time is best utilized and lets other experts make your logistics more efficient. They may be better set up to handle your logistics, and that will free up manpower that you can direct toward the growth of your business.
Ultimately, understanding the importance of logistics engages you more in its management of it, and it comes with great benefits, including:
Reduced overhead
Reduced overhead through lower shipping costs, controlling inventory levels and managing warehouse space.
Customer experience
Improved customer experience through proper deliverables promptly and taking care of any issues through returns and customer support.
Loss prevention
Loss prevention using third-party partners to stock, track and deliver your goods using their established infrastructure.
Support expansion
Support expansion means scaling while calculating inventory needs and fulfilling customer orders.
Higher visibility
Higher visibility enables you to better see any supply chain issues when you are looking in from the outside rather than in the trenches.
You can have the highest quality products that everyone wants and prices that are in the sweet spot of profit and saleability, but without a robust, logistical plan in place, you won’t meet the market’s demands. Understanding why logistics is important will springboard your business to the next level, confident that you can fulfill all your customer’s needs.
Better Customer Experience
The best asset you can have in business is a repeat customer. They are satisfied with your products and delivery systems and will continue to shop at your business and promote your company to family and friends.
To keep them happy, your logistics need to be spot on. This means easy ordering on your site and fast delivery to the consumer. Having an easy-to-use customer service portal will also satisfy them because they can communicate any concerns to your staff so you can correct the issue.
Efficiency and Cost Reduction
The more streamlined a business is, the better it runs. Managing your logistics means monitoring:
- Inventory
- Storage space requirements
- Shipping prices
The more outsourcing you do in your supply chain, the more you need to monitor and track all the components of it to ensure there are no hiccups. This, in turn, can reduce costs as you can negotiate shipping prices, approach other vendors, and have inventory controls so you don’t overstock and use more storage space than is required.
