Factors to Review in Devising a Logistics Strategy

Logistics companies and your business

Logistics is an indispensable part of business management. It is the most extensive one as it covers major business logistics companies operations such as planning, budgeting, procurement, employment, production, marketing, warehousing, transportation, distribution, customer support and inventory. It can be defined as the complex coordination of resources for business operations. These resources include financial capital, facilities, supplies and human resources.

Due to its complexities, some companies seek the services of logistics companies. There are certain business operations (planning, budgeting and production) that can only be done internally or within the company alone. However, it is also possible to outsource some business operations. These business operations include marketing, warehousing, customer support, transportation and distribution. Nowadays, an outsourcing company can even provide highly skilled applicants for your company.

It is essential to consider logistics companies when crafting a logistics strategy. First, you have to review your former strategies, internal business structures, functions and implementation.

Logistics Strategy

Logistics strategies are created to reduce your expenditures and increase your profits. You can acquire increased profits through efficient marketing, customer service and delivery. It is also possible to reduce expenditures in many ways. Outsourcing to logistics companies is just one way.

Based on your financial records, you can measure whether your previous logistics strategies were successful or not. If you enjoy a higher return of investments (ROI), it could mean that you employed a good strategy. Maintaining the most beneficial elements of your logistics strategy is the best thing you should do. Otherwise, you have to pinpoint the errors in your strategy that led you to fail.

Structure

The bigger your company is, the more complex your business structure is. The structure covers several departments and under these departments, there are several offices. A careful examination of your company structure can help you lessen labor costs significantly, provided you do it within the acceptable methods allowed by the law. You can reduce labor costs through layoff of employees from redundant offices within your company.

Function

The functions of redundant offices overlap with another office, making them irrelevant and cause losses for the company. In addition to overlapping functions, you have to think about the relevance of each remaining function.

Right now, advanced technology can replace human labor in some ways. It basically requires the facilities and a skilled operator. The facilities and services of operators may be costlier as compared to the income of a single, casual employee. However, if you sum up the labor costs of several employees, the total could even surpass the expenses for facilities and skilled operators.

Implementation

Efficiency, accuracy and timeliness are three things you need to look for in the implementation of your business plans. You have to find the area where the implementation fails or doesn’t perform well. Do some adjustments in your next logistics strategies.

Apart from the aforementioned main factors, you should also consider the following: competition, warehousing and transportation. Logistics companies can assist in the last two factors.

Competition

You do not have to deploy an industrial spy to your competitors or steal their business reports. Aside from being unethical, this move is incriminating as well. What you need to do is make a comparison between various points. You can also conduct market research.

Warehousing

Warehousing is important in procurement of raw materials and distribution of finished products. This task alone covers storage, inventory and security. A physical facility is also required. You only have two choices: construct your own warehouse or rent. Renting can also entail the hiring of a logistics company.

Transportation

Shipping needs are among the most sought after services of logistics companies. Their services are outsourced because the purchase, use and maintenance of company vehicles are beyond reasonable prices. You have to think about labor costs for drivers as well.


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