- Business and Employment»
- Business Management & Leadership
The Importance of Logistics for a Company
The world's top companies are efficient. Wal-Mart and Toyota, other than 3M and Dell among hundreds of others must be counted among the efficient companies. They share one thing in common - efficient logistics management. The healthy margins and sustainable growth that these companies enjoy are not without valid reasons. There is a secret to their success, that is in fact, no secret. The companies that manage to stay ahead of the crowd must be doing something hugely right.
Of course, the quality of their products outshine the competitors'. They do, in fact, transmit a message hidden in the value they create. They are doing a number of things right, but the key to their edge over competitors must be pinned down to something that is essentially right. They make an efficient and strategic use of integrated logistics operations which defines their overall supply chains.
What makes logistics and supply chain such a huge differentiator? You might wonder, after all, what's such a great deal about logistics. Isn't it some routine operation that every company does in managing their material, and product, apart from systematic information flow? However, ask those who work in the filed of logistics. Ask them what difficulties do they face when they are needed to move the right product, in right quantity. Ask them what it means to move those products at the right time at right destinations. What is more, all these operations must be undertaken like a clockwork with minimum fuss and cost. It is not just the heavy lifting that is critical but thoughts and actions must go in delivering these services day in and day out efficiently and in the most cost effective manner.
There was a time when no one thought how important the logistics was to a company. Yet, Peter Drucker, the renowned management guru thought differently. It was way back in 1962, when Drucker was led to believe that there existed innovation and opportunity in logistics management. It is only now that the critical role the logistics management can play in the fortune of a company is beginning to be realized. The management gurus have woken up to the reality of logistics management today. It is not a necessary cost to be borne by a company, but the actual differentiator that can make or mar a business. The companies can turn out to be more competitive and leave their rivals behind by focusing on logistics. This is the truth that most CEOs of the top performing companies know. They understand it as the central point in their competitiveness.
It is impossible, for instance, to think that Wal-Mart's model of "everyday low pricing" without the application of successful logistics. They are ahead of their rival retailers because they can price their products low, and they can price their products low because they have applied the economies of scale to their advantage. And at the genesis of this model lies logistics. In addition to low prices, what differentiates Wal-Mart from their rivals is the exceptional service they are capable of.
While efficient logistics admittedly favors big organizations and companies, it is equally or even more beneficial to smaller companies. They would be able to minimize waste more efficiently than their bigger rivals. Additionally, the smaller companies can emerge bigger with optimal use of resources to leverage their productivity and profits better than their rivals, provided they can manage time well. The smaller companies will turn out to be more reliable for their customers, with increased and efficient application of logistics, eventually increasing their loyal customers base and profitability.