Logistics is a very important area to the success of global supply chain management. If this crucial part fails, the whole process of supply chain management fails too.
Logistics simply means the whole process of planning and managing how various goods will be acquired, stored, and transported from the area of purchase to the final destination. Logistics highly determine the business’s success as it holds some of the major concepts of the business. In global supply chain management, goods are purchased from all over the world based on low manufacturing costs. Therefore, it may involve broad transportation processes such as shipping, temporally warehousing before going to their final destination or to the respective consumers. If well organized, logistics and global supply chain management can guarantee business success by ensuring timely delivery of goods, best quality, and also lack of wastage within the business.
How logistics are important to the success of businesses in global supply chain management.
Ensures timely delivery of goods.
Today, technology has increased the efficiency of transportation and delivery of goods. For instance, customers worldwide can purchase goods online and get a chance of receiving them in the shortest time possible. Better planning has been done in logistics to ensure various warehouses worldwide minimize distances covered in delivering goods to customers. Timely delivery of goods also depends on the method using in the transportation. For goods that are transported across long distances, faster means of transport are required, while for those to be transported over short distances, simple means of transport are used.
Delivery of quality goods.
Proper logistic planning enhances the efficient movement of goods from one area to another. This ensures there are no delays caused as goods are transported as this would interfere with thequality of goods. Some goods are perishable, hence require the shortest time possible to reach their destination. Warehousing also affects the quality of goods. How the goods are stored matters. The logistics department ensures that goods are stored well to minimize the chances of spoiling.
Logistics in global supply chain management ensures that there are limited intermediaries within the business. The purchasing of goods and transportation is controlled from one point. This strategy ensures minimization of the cost of goods that would increase in the hands of intermediaries. The goods are handled by the fewest people possible before reaching the end-user. Means of transport are also integral in this area. The best and the most cost-effective method of transport is ensured as goods are moved from one place to another. This increases the chances of profitable business.
Logistics plans ensured that goods be received by the right customer in the right quantity. Sometimes in business, theft occurs. Workers within the business are mostly the cause of such vices. Properplanning in logistics would therefore minimize such wastes.
Ensures delivery at the right place.
The growth of technology has led to changes in the business world. Many customers orders their goods online. Well-organized logistics have also integrated technology to ensure faster feedback from the customers. Customers are notified of the delivery of their ordered goods. They immediately give feedback on the arrival of the good. These plans also ensure that customers get their goods at the right place.
Ensures the reputation of the business.
Logistics affects the satisfaction of the end-user. The quality in which the customer gets their goods, in which quantity, and at what time. Once the customers are satisfied with these basics, the reputation of the company or the business is guaranteed. A company with a good reputation will always maintain its customers and more so attract more new customers.
Ensures effective communication.
Global chain management involves many departments. These departments must work in harmony to ensure the success of the whole body. Communication is key to ensure harmony. Communication also ensures there is transparency in all the transactions within the business. Transparency ensures that everything is done openly, decreasing the chances of theft. Communication also ensures the smooth running of business between the suppliers and endpoint users. Suppliers communicate with customers on how to deliver their goods. Customers also give feedback on the delivery of their goods. This brings the success of the whole business.
Increases the chances of getting profit in the business.
Logistics also focuses on reducing the cost of business and maximizing profit. Various steps can be taken to ensure the maximization of profit. Planning on how to acquire goods from cheap sources, minimizing the cost of production, minimizing intermediaries, reducing wastage within the business and also maximizing on advertising the business.
Challenges facing effective logistics.
There are various challenges facing logistics success. These include;
Lack of good logistic managers.
Lack of good transport and communication network in some areas.
Language barriers between some countries that hinders effective communication.
Inadequate capital to construct enough warehouses.
Adverse weather conditions in some countries that affect delivery of goods in areas where there are poor transport networks.
Increase in wastes caused by perishable goods and theft conducted by workers within some departments.
Logistics ensures the smooth running of all activities that are carried out within global supply chain management. This department stands to be crucial as it ensures coordinating other activities within the business. If the logistics department fails, the whole business fails too. The increased cost of production would be witness, lack of harmony within the business, lack of good customer services leading to the failure of the business.
Customer satisfaction is a major step towards the success of any business. It attracts more customers and also helps to maintain the old customers. Logistics also organizes on which is the most effective method of advertising their products. The cost of advertisement is also put into consideration to minimize cost. We cannot separate global supply chain management from logistics as the two are intertwined; without logistics, the whole business has failed.