Importance of Business Logistics
Getting your products or services from supplier to consumer is business logistics. It involves everything from acquisition from wholesalers and suppliers to manufacturing, storage and delivery to customers. It is imperative for every business owner to have a strong understanding of his logistics systems to ensure he is maximizing profits and is able to give customers the most positive experience possible.
Logistics and the Bottom Line
Imagine you are an apple farmer. Your products are apples that may be shipped to grocery stores, farmers markets or even food processing plants that use apples as a key ingredient for pies or other dishes. You need to be concerned with keeping apples free from bugs and pesticides and ensure that they bloom into healthy, sweet fruit. Once the apple is picked, it is then put in an apple crate, sorted, stored and eventually shipped to its final location. This all has to happen within days to keep the apples fresh and crisp. This is your logistics supply chain. Get the best business transporting vehicle deals at semi truck auctions.
If any part of your chain is broken or has a hiccup, it might affect an entire shipment of apples. For example, if the truck delivering your apples breaks down with no replacement immediately available, spoilage is a high probability. The entire shipment might not only never make it to the destination, but it needs to be replaced in a rush. These are costs to the business owner. Everything in logistics affects the bottom line. This includes spoilage, fuel costs, shipping fees, storage and anything else that is involved in getting the product to your customer. If you can reduce product spoilage or reduce logistics costs, you save money and increase your profit margins.
Positive Customer Experiences
Customers that have a good customer experience are likely to come back, and buy again and refer friends and family to you. The customer doesn’t care about how you make your product or what problems there are in getting it in his hands. He cares about receiving his product in excellent condition, as quickly as possible. This is a big issue for online vendors. When your logistics is unable to prepare orders quickly for fulfillment, shipment or delivery, then the customer is left waiting and is probably shopping on another online site.
Business owners can help improve the customer experience by automating as many things as possible including inventory control so they always know what is in stock and what is running low. It is also important to constantly provide customers with updates and feedback. This lets the customer know that the order hasn’t fallen through the cracks. Send delivery tracking numbers so the customer is empowered to follow the order. For orders that naturally take longer to deliver because they may need to be brought from overseas or be custom made, communicate with customers from the start. Let them know how long the order will take. Being upfront when it comes to logistics and delivery keeps customers engaged and satisfied.
Business owners that don’t have a good grasp on logistics often struggle to understand why theft, spoilage and losses are high with inventory numbers. If a business owner knows it should take two days to get the product from San Francisco to Colorado but it is consistently taking three, he needs to confront the shipping company. There is a problem with this segment of logistics that needs to be corrected by the vendor or replaced with a new one.
It is also a logistics issue to have too much inventory on hand. If a fire erupts in the warehouse, considerable losses could have long-term effects on consumer confidence. Existing orders would result in delays in fulfillment. New orders would be halted. The customer base might think that the company is no longer able to fulfill the order if the problem goes on for any length of time. Plus insurance costs and dealing with claims is overwhelming, since many businesses are underinsured when it comes to inventory. Businesses need to have reliable suppliers to ensure they don’t need to absorb warehouse costs and risks by maintaining excess inventory of products.