Logistics

Logistical considerations have always played a strategic role in business. Among retailers and wholesalers, they transcend inventory management and transportation to include one of the most critical factors in business success—location in relation to markets or sources of supply. Logistics concerns itself with matters as basic as plant location, sourcing of raw materials, and standards of customer service. In recent years, changes in the business environment have forced companies both large and small to pay particularly close attention to how this function relates to others.  Logistics can spell the difference between success and failure in business. Logistics-oriented strategies are also important in large companies. hey all involve decisions that are long-term in their implications.

All involve actions that are big-dollar in relation to the overall size of the companies in which they are implemented. All provide a competitive advantage that, unlike pricing or other actions, is hard for competitors to duplicate. Although they have done it intuitively for years, many companies are more systematically reviewing ways of postponing their commitment of resources to specific end products as long as possible in channels of distribution in order to reduce the risks of accumulating obsolete or unusable stocks. Others are willingly incurring the risks of speculation, involving the preparation of stocks in advance of need, in order to achieve economies of scale and lower the costs of production.

Attention to logistics

Attention to logistics can support expanded product lines in good times or provide a basis for gaining a competitive profit edge during periods of slow growth. Whether the goal is increased market shares or increased profits from existing or smaller market shares. Logistics considerations can be basic to these accomplishments.

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