Why Effective Logistics Is Important For Firms

Logistic management is not just planning but managing the business process and supervising the movement of goods.

Logistics is an important part of the supply chain management where the supervisors or the team has to plan, implement and control the efficient and effective flow and storage of goods from the point of creation to the point of consumption.

With the advancement in technology, the trade is not local anymore, it has gone global.

Here, we bring to you some reasons why effective logistic is important for firms:

  • Advantages in low-cost sourcing for components, labour and expertise

Outsourcing allows the organizations to focus on their core business and can create a competitive advantage by reducing the operational costs.

Firms having effective global logistics operations can take advantage of low-cost sourcing for components, labour, or expertise.

The low-cost sourcing is an objective of many organizations as they want to go global to increase revenue opportunities.

  • Increased market meaning increased revenue opportunities

Effective management of logistics can increase a company’s market value with a strong impact on revenues and costs.

In logistics and supply chain management, continuous development and growth are essential to smooth the progress of healthy and constant growth.

Increased price on expenses like energy to labour or raw materials creates a challenging position for any organization.

  • Global logistics is important for decision-making

Global logistics helps an enterprise in making decisions for forecasting growth and demand planning

Logistics is planning and managing the transportation of goods, taking care of customers’ product and supply them on the right time. Logistics helps in achieving a demand-driven approach to forecast and plan the demand for the product accordingly.

  • Improve customer service through saving time on orders

Technology has simplified the logistic and supply chain management that helps an organisation to operate efficiently and give visibility. With technology and internet based software, the supply process reduces the errors during the ordering of the product.

Through these softwares, organisations can reduce the time spent on shipping, receiving, tracking the order. If a customer gets their product in such a systemized way, it brings in loyal customers.

  • Inventory can be reduced through ‘Just In Time’ shipping

Just-in-time inventory management is an inventory control system in which the products are manufactured or purchased and stocked in the warehouse only when there is actual customer demand.

With JIT inventory management, you not only reduce wastage but also can save the cost of purchase or manufacture. Sometimes keeping excessive stock might not be sold, which goes to waste.

Sign up with Education Lanes for XLRI’s Executive Program in Logistics and Supply Chain Management course to know advance your career in this field.

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