Any company that offers customers goods and services can improve their bottom line by implementing a solid logistics strategy. In time, this plan will exponentially increase overall business development.
Still, it’s not easy to come up with a logistics strategy that keeps service levels consistently high. Moreover, these changes also have to be stable, regardless of fluctuations in other parts of the business. In fact, the more complex the internal structure of a company, the bigger and more diverse its business operations, the less the quality of supply chain management should fluctuate.
A company that operates within a narrow market—perhaps, offering only a certain product line, selling only within certain countries, or addressing the needs of only certain customers–has to get their logistics right.
Finding the right solutions for your company’s storage and distribution needs increases profitability and promotes your corporate reputation for reliability.
However, logistics is a complex topic in itself, and this makes it difficult to decide what to focus on. Should your business focus on improving its infrastructure to speed up production?
Should your business enroll a third party logistics service, like warehousing from Unigroup Logistics, to improve profits and build a reputation for reliability?
Should it focus on minimizing costs to attract a wider customer base?
Should it simply get very clear on its business objectives and streamline all its strategies, including its logistics strategies, to fall in line with that objective?
The answer to these and other questions has to be answered to get clear on the 3PL that will help your business.
With numerous variables to consider, how do you determine your best logistics strategy? There is no single right answer. However, here are 7 ideas that will stimulate your thinking on how to improve logistics within your organization:
- Your company can orient is logistics based on predicted volumes. If your company is new, perhaps one that has recently launched, it will not have historic volume, which makes it difficult for providers to offer competitive rates. In this case, using predicted volumes is a way to slash prices. Freight costs can be discounted with fairly accurate predicted volumes.
- Your company can orient its logistics based on consumer demand for its services. By matching demand for services with the supply of services, it will trim down transport spending. Demand driven logistics, often referred to as inbound logistics, offers another advantage besides reduced costs; it allows a company to gather real-world information on consumer demand volume so that it does not over-produce or under-produce its manufactured goods.
- Your company can orient its logistics based on Sales and Operations Planning (S&OP). This is done by having an open discussion between finance, procurement, manufacturing, warehousing, transportation, sales, and marketing. This review and assessment between different divisions will help coordinate business operations. However, only by including all divisions, is it possible to get an accurate reading of how to coordinate all activities within the business. It’s important to do this with all teams, including outsourced and multicultural teams.
- Your company can orient its logistics based on hiring a knowledgeable an experienced logistics professional. This person should have excellent interpersonal skills, be well-connected to the supply chain industry, be a leader with a proven record, and, of course, have a keen grasp on finances. Additionally, to navigate international trade complexities effectively, it may be beneficial to work with a U.S. customs broker who can provide expertise in customs regulations and compliance.
- Your company can orient its logistics based on its primary mission purpose. Once the corporate strategy has been spelled out, it makes it easier to plan all aspects of the business, including how to orchestrate logistics.
- Your company can orient its logistics based on its customer’s needs and desires. Since the aim of a business is to satisfy customer’s needs, your business needs to find out what your customers like about your supply chain operations and what they believe that they are spending too much money on. If there are different groups of customers, each with their own specific needs, then it’s important to segment your customer base and develop a customized supply chain process for each segment to provide maximum value to the end-user at the lowest cost.
- Your company can orient its logistics based on its infrastructure. Your infrastructure is a collection of components—where your facilities are located, what you are manufacturing, what equipment you are using, who is buying your products, and so on. By understanding the infrastructure, how it all comes together, it will be much easier to come up with a sensible and realistic supply chain information system.
Summary
There is no one best way of organizing supply chain management. No best practice. Industries are too varied to offer a formulaic approach. However, by determining predicted volumes, surveying consumer demand for services, analyzing Sales and Operations Planning (S&OP), hiring an experienced logistics professional, clarifying the primary mission purpose, or understanding the business infrastructure, it’s possible to come up with a logistics plan that will work well in practice.
