The Importance of Logistics for a Business

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logistics

The ability to optimize the delivery of goods from manufacturer to consumer is the key to a successful business.

Therefore, every entrepreneur (both experienced and novice) needs to understand what it is.

Logistics is the science of the process of moving a product or service from the starting point (producer) to the end point (consumer).

All processes related to the transportation of goods are subject to logistics.

Not all entrepreneurs understand that even the production itself is established and works without interruptions only due to the fact that the logistic scheme of interactions is clearly verified and calculated.

From the explanation above, a simple layman or a newbie in the business world may not immediately understand the whole essence of logistics.

An example of the use of logistics at all stages of business

Company “X” has developed a new line of products.

The plans of the management are to launch production and organize the process of selling this product.

To accurately calculate each stage of the project’s implementation, you need to form a logical chain. Each segment has its own rules of work, often – individual leaders.

But what is especially interesting is that every process, one way or another, is affected by logistics, and is completely subordinate to it.

Production planning

This is the starting point for a product manufacturer to set up a manufacturing process.

Why is the influence of logistics on the construction of production so important?

Planning the supply of raw materials, placing production facilities, transporting raw materials and finished products as they are manufactured – each of the stages is accompanied by the movement of objects along the chain indicated in the diagram above.

At this stage, the task of the logistician is to calculate the least costly routes for transportation, as well as organize the work as soon as possible.

Supply planning

After the production of products, the Company “X” must take care of the next stage of delivery of the goods to the client’s hands – the sales network.

To transport a product, it is necessary to determine the best and, at the same time, the shortest delivery routes.

The task of the logistician is to arrange work on the movement of products with jewelry precision.

If your logistics department is performing poorly, expect serious losses.

Sales process management.

Even when products produced by Company “X” is on the shops, the logistics will still be involved.

Just not in a “pure” form, but in combination with marketing.

It is interesting, but even the simple movement of the goods through the warehouse of the distributor and the height of the “face” * of the product on the shelf is a derivative of the logistics operations.

A small summary can be summed up: the entire process of production and sale of goods depends on logistics.

Well-thought-out and implemented logistics operations are the key to obtaining the planned income on time and in full.

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