Importance of logistics in supply chains: a micro perspective

Today companies face increasing levels of competitive pressure and challenges to maintain and improve profitability. There is also increasing pressure from customers and shareholders, necessitating that managers seek ways of reducing costs, while at the same time improving performance.

In a series of SmartProcurement articles, Tafara Svosve (Msc Supply Chain Management; CMILT) will focus on the role of logistics in supply chains. Our goal is to help our readers identify skills gaps they need to close to improve their logistics operations and, hopefully, improve the overall logistics performance index of their countries on a global scale.

Logistics key to organisational efficiency and effectiveness

In today’s competitive environment it has become imperative that organisations find ways to improve the efficiency and effectiveness of their operations. Companies should realise that logistics can play a key role in this regard – particularly in terms of affecting the organisation’s sustainability, competitiveness and profitability. Any successful business leader will acknowledge the importance of an effective logistics function and understand that a seamless logistics process is key to keeping pace with customer demands and outperforming competition.

Whatever the business location or industry, logistics can help cut cost and time spent moving products from one location to another. Supply chains have become more complex and sensitive, as they respond to ever-changing customer demands. Logistics has become one of the most crucial factors in the quality of a supply chain. For example, a supply chain cannot ensure high value without efficiently organised transport. Effective and efficient transport enables supply chain professionals to move and deliver products to the right location, on time – a key factor in business success.

Customers expect their products to be delivered quickly and promptly, regardless of their distance. In order to co-ordinate a seamless logistics process, smart businesses hire experienced and qualified professionals to align the critical path of products in the most effective, convenient, efficient and practical way.

Positive contribution to business

An effectively co-ordinated logistics function leads to positive business results, no matter the size of the business. Logistics can be used by small, medium or large businesses to plan and co-ordinate the flow of products timely, securely and effectively to reach customers across wider geographical boundaries, creating value for the organisation. To increase the value provided to their customers, business can either improve their own logistics activities, or engage logistics professionals outside their own organisations.

Logistics: the heart of globalisation

Supply chains are unique and complex networks of businesses that deal with the production, shipment, warehousing and delivery of products. These networks are crucial to businesses as they largely affect sales and profits. However, supply chains cannot help your business gain a clear advantage over competition without effective and well organised logistics. While a good marketing strategy can open many doors and attract customers to your business, a reliable logistics service can help the business build and maintain a positive public image. On the other hand, poorly organised logistics can lead to loss of customers and consequently decreased sales and profits.

The development and expansion of global competition, international growth of companies, increasing foreign sourcing of raw materials, components and labour have all contributed to making logistics the heart of supply chains. Business leaders should realise that they can reduce costs by establishing partnerships with highly professional, reputable and reliable logistics companies for services such as transport and warehousing, across the globe. These partnerships may drastically improve the business’s overall efficiency and contribute to improved reputation and stronger brand positioning – leading to improved customer experience and higher operational efficiency.

Improving customer satisfaction

These days, customers are more likely to buy on impulse, purchasing on-line and being impatient about receiving their order. With professionally organised logistics, businesses can meet tight time requirements by choosing an experienced and qualified team of professionals to ensure quick and safe shipping, warehousing and delivery of their products to customers.

Satisfied customers are valuable assets for any business, and it is the objective of logistics to improve customer satisfaction. It is therefore a priority for business owners to clearly understand customer needs, preferences and demands and continually work to improve them: business strategies should be developed with the end customer in mind. Keeping customers satisfied and exceeding their expectations closely depends on effective logistics.

Training provides the competitive edge

Companies in South Africa need to greatly enhance their ability to compete in the global environment. Logistics management and innovative supply chain strategies have an important role to play in this regard.

At Commerce Edge, we understand the importance of logistics at the heart of an organisation’s competitive strategy and look forward to assisting you with your training needs, to enable – and improve – your organisation’s logistics services to your customers.

Tafara Svosve (Msc Supply Chain Management; CMILT) is an experienced and qualified logistics practitioner now focussing on training and facilitation with specialisation in Logistics and Transport.

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