The importance of logistics in your business

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The importance of logistics in your business
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Meeting customer demand and delivering superior service as a differentiator are the most important benefits of good logistics management. The provision of fast, accurate and quality services is the responsibility of this sector.

Índice:

Proper management therefore drives revenue growth, brings a good reputation to a company's brand, generates more business, and reduces costs.

But, after all, what is logistics?

Logistics, in a broader meaning of the word, refers to the process of coordinating and moving resources - people, materials, inventory and equipment - from your place of production or storage to the desired destination.

In a general sense of business logistics, managed resources can include physical items such as food, equipment, and even animals, as well as intangible items such as time and information.

Logistics comprises the flow of information, material handling, production, packaging, inventory, transportation, storage and often security.

Origin of the meaning of logistics

The term "logistics" originates from military science. It was used to deal with the movement of equipment and supplies to the troops in the field.

Its main function was to maintain the supply lines of the army and at the same time to harm the supply of the enemy: an army without resources and transport is incapable and helpless.

The importance of logistics in your business

Logistics and its processes

Logistics is a complex and integrated distribution system. It is therefore composed of several interdependent processes, responsible for the effectiveness of the output and arrival of products and services. Watch:

  1. Purchasing Management

Managing purchases ultimately boils down to the act of getting or buying goods and services. The process includes the preparation and processing of a claim, as well as the final receipt and payment approval.

It is paramount that the goods are bought at the best price and quality to provide the highest profit for the company. Hence the importance of purchasing management, which directly affects the profitability of the business.

This requires research and proper selection of raw materials and sources, delivery tracking, quantity inspection, in addition to traffic control, receipt, storage and accounting transactions related to purchases.

The entire purchase cycle begins with a purchase order to be approved. Then, a comparison is made between various products and suppliers. With the chosen product, company and supplier negotiate the terms and determine whether it is a single or continuous relationship. Upon receipt, inspection and registration are performed.

Purchasing management thus works to the benefit of the organization and also of its customers, since it increases the possibility of improving the sale price, inclusive.

The importance of logistics in your business

2. Storage and Inventory Management

A inventory management involves understanding the mix of actions of a company and the different demands of its storage. Their goal is to minimize the cost of holding stock by helping to know when it's time to refill products or buy more material to make them.

O inventory control applies to all items that you use to produce a commodity or service, from raw materials to finished products. Efficient management allows you to have the right amount of inventory in the right place at the right time.

It ensures, therefore, that its capital is not unnecessarily compromised at the same time as it protects production if supply chain problems arise. As well as the cash flow, stock management is able to keep or break your business.

Good inventory management prevents spoilage if you are dealing with expired products such as cosmetics or food. It also avoids waste and "dead stock" - when the product went out of style or became irrelevant.

And do not forget the inventory! It should also be included in your cash flow as it directly affects sales and expenses. When you have a solid control system, you know exactly how much product you have and can design replacement on time based on sales.

3.Distribution and Delivery

Distribution and delivery are an important part of your business plan. They are, in essence, the way you put your products and services in the hands of your customers.

Failure to plan the method and the cost of distribution or delivery can be a fatal error. To set them, you need to consider all the costs involved, including warehouse space, transportation, shelf space allocation, product returns, and other necessary expenses.

And you can also use distribution and delivery as a competitive advantage, for example by offering home delivery, online service, or other approaches that fit the reality of your product and the wishes of your customers.

Finally, see this process as an expansion strategy as well, looking for new distribution channels. Offering your products online, for example, or through new distributor or retailer relationships, can allow your company to open new niches and markets.

The importance of logistics in your business

How does Logistics relate to other industries?

Planning

Logistics is the efficient flow and storage of products from the point of origin to the point of consumption. It's the planning, on the other hand, covers all the strategies employed by an organization, affecting all aspects of production.

These strategies range from workforce activities to product delivery. Therefore, every company requires effective planning of logistics and operation at the same time to produce products and deliver them to the end user.

Successful businesses require effective operations management. This means managing inventory levels, ordering and storing materials while attempting to maximize capacity, monitor interactions within the system, and maintain strong relationships with suppliers.

Operational and logistics planning typically involves the use of spreadsheets, with a detailed analysis of the costs associated with operations, setting performance goals, and monitoring the organization's progress to achieve those goals.

Sales

Logistics and sales are complementary business operations that allow a company to ensure the right products are delivered to the right customers in the right place. By coordinating logistics and sales, companies can create the highest levels of customer satisfaction.

Companies need to ensure this satisfaction from the complete customer experience, from the initial order to the delivery. An effective logistics operation ensures that:

  • the customer receives the products he orders quickly and in the right conditions;
  • the retail customer has products in stock when visiting a store;
  • if the customer needs to return a product, make the process fast and convenient.

In addition, as discussed in the previous item, choosing the right distribution strategy allows companies to target different industries and increase their market share.

A store that serves a local community can increase its business by offering a delivery service to out-of-area customers who order online or over the phone, for example.

The success of a company, therefore, depends directly on effective communication between Sales and Logistics. Sellers are on the front line and know the customers' plans. If they communicate this information to Logistics, this will help improve product availability.

The forecasting process thus plays an important role in business. The daily interaction of sales provides valuable information about your accounts for logistics. Maintaining a good flow of communication is the key to an efficient sales process.

The importance of logistics in your business

Operational and production

Good production and logistics management focuses on the design, planning, optimization and control of operational processes in production, transportation, supply chains and sustainability and service logistics.

Modern methods of production and logistics are increasingly complex. Product life spans are diminishing, suppliers and buyers are spreading across the planet and more and more activities are being outsourced.

So you need to identify the best location for production facilities and distribution centers, as well as the resources they need. In addition, it is necessary to structure production, storage, transportation, distribution and purchasing, since the goal is to offer customers the standard of service they desire and ensure the reliability of the process.

The combination of production and logistics therefore represents a balancing act. From an external perspective, customers expect fast response times as well as high quality products. From an internal perspective, the company values ​​the profitability and performance of deliveries.

This balancing act has to be able to respond:

  • What is the production strategy that best supports our company's goals for customers, finance, employees, and markets?
  • How can we make ourselves even more efficient and reduce costs even more?
  • How can we speed up our response times?
  • How can we manufacture our products to accurately meet the expectations of our customers?
  • How can we reduce high inventory levels and eliminate inflexible logistics structures?

Production and logistics teams therefore need to work to develop innovative strategies and solutions that ultimately achieve customer satisfaction.

Financeiro

Traditionally, finance and logistics are considered to be the two functions of the organization that have always met on opposite sides of one another.

On the one hand, logistics wants to expand the business by giving more credit to its customers and keeping inventory to better serve it. On the other, the financial is seen as the control function that does not believe in blocking money through excess inventory.

Fact is that to stay financially good, the company must have enough sales to cover current expenses and the fixed cost, in addition to a steady and increasing return on investment. The financial performance of a company therefore depends on low inventories, quality of delivery and delivery time. That is: logistics.

Low costs, high revenues and effective logistics performance reflect the financial performance of the company, demonstrating greater profitability and productivity, as well as opportunities to grow faster than competitors.

The importance of logistics in your business

Technology

The evolution of technology is pushing the boundaries and changing the way the world does business. Each time we have greater access to goods at your fingertips and in time.

The technology also increased supply chain productivity, minimizing costs and errors. Until recently, customers placed their orders, received an estimated delivery date and were left in the dark.

Today, advances in Internet and software allow customers to access 24 shipping and tracking systems hours a day, 7 days a week. This not only improves the user experience, but also saves time and money for the company.

The accuracy of GPS devices also allows for increased productivity and satisfied customers by not only tracking the locations of the trucks but also improving transport through access to up-to-date traffic data.

In addition, we are heading for an era in which you receive a package of a flying unmanned aerial vehicle, the famous drones. Standalone cars are already a reality, with trucks already on the horizon. Imagine the potential for increased efficiency in the delivery process!

If that were not enough, social media is also optimizing the logistics industry and operations as a whole. These platforms are becoming the easiest way for businesses to communicate with customers, delivering information, news and customer feedback quickly.

To stay competitive, it is essential to stay current with the latest technology. The logistics industry is benefiting immensely from the latest technology and will continue to grow as more advances are made.

Logistics within the Supply Chain

It is very common for some people to confuse the concepts of Logistics and Supply chain (or supply chain). Some say there is no difference between the two terms, that the supply chain management is the "new" logistics.

Although they have some similarities, the two terms are, in fact, different concepts with different meanings. Logistics refers to the movement, storage and flow of goods, services and information in of the supply chain.

While logistics focuses on activities such as purchasing, distribution, maintenance, and inventory management, the supply chain involves all traditional logistics and marketingdevelopment of new products, finance and customer service.

Supply chain logistics must work to satisfy both customers and suppliers. This usually comes down to managing warehouses and inventory quickly and easily.

That is, to create productive, economical and dynamic inventory, logistics and inventory processes, with detailed records of products and parts, in order to keep costs under control.

This requires inventory management systems. They eliminate data entry errors and shipping errors, often associated with manual stock control practices.

With good visibility and supply chain management, organizations avoid delays in shipments, supply chain disruptions, and revenue losses. Also, in the cases of reverse logistics, which we will see below.

The importance of logistics in your business

Reverse logistic

Reverse logistics represents all operations related to the reuse of products and materials. Any process or management after product delivery involves reverse logistics.

According to Ministry of the Environment, reverse logistics is an instrument of economic and social development characterized by a set of actions, procedures and means to enable the collection and restitution of solid waste to the business sector for reuse in its cycle or in other production cycles, or other environmentally appropriate final destination ".

But not only that. Remanufacturing and reconditioning activities can also be included in the definition of reverse logistics, as well as the process of returning merchandise to the consumer.

If the product is defective, the customer will return the product. The manufacturing company will then have to test, disassemble, repair, recycle or dispose of the product. The product thus travels in reverse through the supply chain network.

While many companies find the return process to be a bad one, companies that implement an effective reverse logistics workflow can reap several benefits:

  • Reduced costs: By planning refunds in advance and making the correct return, you can reduce related costs;
  • Faster service: Repaying or replacing goods quickly can help restore a customer's faith in a brand;
  • Customer loyalty: Dealing with mistakes is as important as making sales. Successful reverse logistics is able to keep your customers happy, even after making a mistake.
  • Loss reduction: recoup the loss of investment in your defective product by repairing and replacing the unit, discarding it for parts or adapting it to a secondary market.

The importance of logistics in your business

Advantages of Investing in Logistics

The vast majority of companies focus on developing and producing their merchandise and services to well meet customer needs. However, if these products do not reach the customer effectively, the business will fail.

This is the main role of logistics. If products are not produced and dispatched in a timely manner, customer satisfaction may decline, adversely affecting the company's profitability and long-term viability.

In addition, the more efficiently raw materials can be purchased, transported and stored until they are used, the more profitable the business will be. In summary, coordinating resources to enable the delivery and use of materials can drive or break a company.

The importance of logistics in your business

Tools for Logistics

Freight Control Spreadsheet: Track all the freights you carry out and organize the information for your entire fleet, from travel expenses and fixed expenses to freight receipts. This way you will be able to monitor which freights are being more advantageous, problematic drivers and better vehicles automatically.

Inventory Control Worksheet: Register your suppliers and employees, record all the inflows and outflows of your inventory by distribution center, and have full control of your inventory.

Fleet Control Worksheet: control all your fleet by type of vehicle (trucks, cars, motorcycles, etc.) and driver, and monitor maintenance (preventive and corrective), tires, running and supply, with automatic graphics.

Complete Purchasing Management Worksheet: Track your purchasing process by ensuring that all necessary quotes are being made and the purchase order forms are being used in order to find the best prices.

Consigned Stock Control Worksheet: control the entire flow of delivery, sale and purchase of products on consignment. This way you will be able to visualize your consigned stock, products with resellers, entrances and exits, cash flow and more.

Goods Delivery Control Worksheet: Record all logistic deliveries your company makes monthly and organize the information for all your deliverers, dates and delivery locations. This way you will be able to track all orders made and you can have total control of your logistics.

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