Starting Logistics: What to Prioritize

Posted by at 13 August 2023, at 05 : 11 AM

Starting Logistics: What to Prioritize

Logistics is the lifeblood of any business operation, ensuring the smooth flow of goods from production to the end consumers. Effective logistics management reduces operational costs and augments customer satisfaction by providing timely deliveries and high product availability. According to a recent survey by the Council of Supply Chain Management Professionals (CSCMP), businesses spent $1.5 trillion on shipping and logistics in the US alone.

Meanwhile, the World Bank’s Logistics Performance Index (LPI) highlights a strong correlation between a country’s logistics performance and economic growth. A 10% improvement in a country’s LPI score correlates with a 1% increase in trade volumes. These statistics underscore the critical role of logistics in business performance and economic prosperity.

However, building the logistics division for your company isn’t straightforward. It requires careful planning and preparation to establish an efficient shipping, tracking, and inventory management system. Here are some critical steps that should be prioritized when setting up your logistics division:

Identify Logistics Needs

Every business has unique logistics needs based on its operational scope. Whether it’s dealing with raw materials, manufacturing goods, or handling customer deliveries, it’s essential to identify the specific areas of your operation that require logistics involvement.

Here are a few areas where logistics might be necessary:

Analyzing Supply Chain

Part of identifying logistics needs lies in understanding the entire supply chain. For example, a farm-to-table restaurant might require an efficient cold chain logistics system for transporting fresh produce from local farms directly to their kitchen. The supply chain will differ for manufacturers, retailers, and distributors. Conducting a thorough supply chain analysis can help you plan a more efficient logistics system.

Establishing Warehousing and Storage

You may need a suitable storage solution depending on your goods’ nature. For instance, a business dealing in perishable items like food or medicines would require cold storage facilities. Of course, other factors must be considered, such as the type of product, location, weather conditions, and any additional safety regulations that must be met.

Considering Transportation Requirements

Understanding transportation logistics is vital for businesses that must move large volumes of goods. An e-commerce business, for example, would need to establish efficient shipping routes to deliver products to customers promptly. Choosing the appropriate transportation mode, such as air or sea freight, will also be essential.

Implementing Inventory Management

Inventory management is a crucial logistics aspect. Retail businesses, for example, require a robust system to keep track of inventory levels, reduce stockouts and overstocks, and ensure optimal product availability. Software solutions like inventory management systems can help track stock levels and forecast demand.

Securing the Resources

Securing necessary resources is a crucial step in establishing a successful logistics division. Without the right tangible and intangible resources, even the most well-planned logistics strategy may fall flat.

Tangible resources include the physical assets used in logistics operations. For instance, these resources include warehousing and storage facilities, vehicles, and equipment. For example, a company specializing in cold chain logistics would need refrigerated storage and transportation facilities to ensure quality preservation of goods in transit or storage.

Vehicles are integral to the logistics process, and companies must consider the type of vehicle they will use. Will they require trucks for long-distance shipments? Or maybe a pallet truck to move containers within their warehouse? The right combination of vehicles can help reduce costs and optimize operations. An aluminum closed van will provide better security than an open-backed truck. The car will also ensure temperature-controlled transport of fragile items.

On the other hand, intangible resources include various software and human capital forms. Advanced logistics software can streamline operations by automating inventory tracking and route optimization tasks. A team of skilled logistics professionals is another invaluable resource. Their knowledge and expertise can help navigate the complexities of logistics management, ensuring seamless execution of your logistics strategy.

Hiring the Right Logistics Workers

Of course, recruiting the right logistics workers is essential for a successful operation. Companies should consider job requirements from different angles, including specific skillsets, cultural fit, and experience in similar roles in other organizations. Logistics professionals must be able to navigate conditions such as uncertain weather patterns and congested roads. Therefore, companies should also evaluate candidates’ problem-solving abilities.

There are many job opportunities in logistics, such as transportation managers, supply chain analysts, warehouse supervisors, and more. Companies should determine their needs and identify suitable candidates to help them meet their goals.

Final Thoughts

Logistics is an essential component of any business operation, and its proper implementation can improve efficiency and customer satisfaction. By prioritizing these steps, businesses can ensure the smooth flow of goods and services from production to customers. Logistics is complex but achievable with careful planning and preparation.

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