Why is logistics important for your business?
Logistics is a highly valued aspect of modern business, especially in the retail sector. It is best described as the process of moving products from the manufacturer or distributor to the customer. The customer may be a retailer or someone who further distributes the product. The process involves transporting goods, often across country and sometimes overseas, depending on the size of the company and the products that it sells or distributes. Logistics has come a long way since its early days, and is now a sophisticated operation that involves many different professionals and sophisticated computing systems that allow for the tracking of products throughout a supply chain.
One key aspect of logistics is the impact it can have on the profits of a business. An area in which this becomes apparent very quickly is in customer satisfaction. Whether the customer is a retailer or an individual, if the product does not get to them in time then they will be unhappy, and will most likely not order from that manufacturer or distributor again. This leads to less business and therefore less money. This is why companies search for the very best logistics companies to help them manage their supply chain effectively, so customers are not let down.
Expenses – Logistics companies can save you money
Also, companies have to take a lot of factors into account when working out their expenses. If they have to store a lot of product in their warehouses while they wait for a logistics company to collect it and then distribute it, they are incurring costs that could affect their revenue directly. A good logistics company works with the client to establish processes and routines that help to keep stock moving and shipping, so that no costs are incurred as inventory languishes in warehouses. This can be a tricky operation, and the best logistics companies have years of experience and established routines to ensure that all goes well.
Taking this a step further, companies that sell product have to store it and a lot of the money around this is based on finance. Buying the inventory, as well as the equipment needed to store it, not to mention the space, is often done though finance deals that the company has made. If they are late in payments due to them not receiving cash flow through poor logistics, then they will experience falling lines of credit, and possibly default. Any future problems with finance will affect the growth of the company, as it struggles to raise any kind of financing for future projects.
This shows just how important logistics can be for a company. If they get it right, and choose a good logistics provider; they are guaranteed smooth operations, manageable costs, and continuous cash flow. If they get it wrong, at the very least they could have rising costs and wastage. At worst, they could be facing a failing business model that has to be eventually shut down. Companies will continue to lose money if their logistics is not managed well.