Added value (logistics)

From CEOpedia | Management online

Traditionally logistics was identified with the functions of transportation, stocking and storage of goods. Along with the changes in the market conditions, companies recognized the need to increase the involvement of logistics activities in the processes of production scheduling, procurement and supply Actions defined originally by M. Porter in the value chain concept as services include: warranty and post-warranty services, which is also to a large extent of interest in the area of ​​logistics.

However, it is important to note that depending on the industry impact of the different types of tasks on the value of the products is significantly different. Main factors differentiating the importance of individual business areas can be: characteristics of the products and the associated requirements in terms of production, selection of ways to activate sales and after-sales service (warranty and post-warranty).

It is worth noting that to date, market conditions for enterprises make the value proposition for the buyers, not only by physical characteristics of the product, but also by the support package added with the purchase of the product. Increasingly important role is played by such elements of logistics services, as.:

  • The possibility of immediate delivery of goods sought by the customer (product availability "in stock"),
  • the delivery time,
  • Completeness and safety of delivered cargo,
  • ability to deliver emergency supplies
  • Range of after-sales services (delivery at the destination, service complaint handling, after sales service, etc.).

See also:

Examples of Added value (logistics)

  • Supply chain management - Supply chain management (SCM) is the coordination of production, inventory, location and transportation among the participants in a supply chain to achieve the best mix of responsiveness and efficiency for the market being served. It is an integrated approach to planning, organizing and controlling the flow of goods and services from supplier to customer.
  • Inventory management - Inventory management is the process of managing and controlling the inventory of a business. This includes tracking current stock levels, predicting future demand, and ordering new products as needed. Good inventory management can help ensure that a business has the right products when they're needed and can help minimize the costs associated with holding too much inventory.
  • Just-in-time delivery - Just-in-time delivery is a logistics strategy that involves delivering goods to customers as they are needed, rather than stocking them in advance. This helps reduce inventory costs and the risk of holding obsolete or excess stock.
  • Order fulfillment - Order fulfillment is the process of receiving, packing and shipping orders to customers. It involves a number of different processes, including order processing, inventory management, warehousing, pick & pack, and shipping.
  • Reverse logistics - Reverse logistics is the process of managing the returns of products from customers. This includes tracking returns, restocking products, refurbishing and disposing of products, and issuing refunds.

Advantages of Added value (logistics)

Logistics activities have become increasingly important in recent years, bringing many advantages to companies. These advantages include:

  • Increased Efficiency: By coordinating the flow of goods and services, logistics activities help to reduce costs and optimize the efficiency of the supply chain. This can help to reduce waste and improve customer satisfaction.
  • Improved Customer Satisfaction: Logistics activities can help to improve customer satisfaction by ensuring that goods and services are delivered on time and in the correct quantity. Logistics activities can also help to reduce the incidence of defective or damaged products.
  • Increased Profitability: Logistics activities can help to improve profitability by reducing the cost of production, transportation and storage. This can help to reduce the cost of goods and services for the customer, thus increasing the company's revenues.
  • Improved Flexibility: Logistics activities can help to ensure that the company can respond quickly to changes in customer demand. This can help to lower inventory levels and increase the effectiveness of production scheduling.

Limitations of Added value (logistics)

Logistics activities, although essential for a company's success, have some limitations in terms of the added value they can bring. The following list details some of the common limitations:

  • Limited control over external conditions: Logistics activities are largely dependent on external conditions that are outside the control of the company, such as weather and road conditions. This can lead to delays and unexpected costs, reducing the efficiency of the supply chain.
  • Resource constraints: Logistics activities require significant financial and human resources, which can be difficult to acquire in times of economic downturns or when attempting to expand the scope of operations.
  • Dependence on other departments: Logistics activities are often dependent on the activities of other departments, such as production and procurement, in order to be successful. If these departments are not properly managed, it can lead to delays and disruption of the supply chain.
  • Complexity: Logistics activities are often complex, involving a large number of different processes and actors. This can lead to confusion and errors, reducing the efficiency of the supply chain.

Other approaches related to Added value (logistics)

In addition to the traditional transportation, stocking and storage functions of logistics, there are several other approaches related to Added value (logistics) that companies utilize to increase the efficiency of their operations. These include:

  • Just-in-time (JIT) delivery - This approach allows companies to order goods just before they are needed, reducing inventory costs and increasing the efficiency of delivery.
  • Reverse logistics - This is the process of returning goods from customers or distributors to the original supplier, which can reduce costs and improve customer service.
  • Cross-docking - This is the practice of receiving goods from one supplier, transferring them to another truck, and then delivering them to the customer without stopping for storage. This reduces the amount of time and money spent on storing goods.
  • Supply Chain Management (SCM) - This system allows companies to manage inventory, transportation, and delivery of goods in a more efficient manner, creating cost savings and improved customer service.

Overall, these approaches to Added value (logistics) are designed to increase efficiency and reduce costs for companies, allowing them to better serve their customers.


Added value (logistics) — recommended articles
Material stream — Contract logistics — Procurement logistics — Coordinative function of logistics — Supply logistics subsystem — Logistics — Role of transportation — Outbound logistics — Principles of Supply Chain Management — International trade strategy

References

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