Logistics is defined as the movement of goods from one point to another along the supply chain of an organisation. Depending on the industry, this can refer to the transportation of raw materials, employees, finished goods, or any other resource the organisation controls and requires movement of. With the development of modern technology, businesses have evolved to have greater reach and server a larger customer base. This has naturally resulted in the requirement of a process to deliver their goods to remote locations. Similarly, manufacturing organisations are able to source raw materials from distant locations through their supply chain through an efficient logistics function. Logistics is an integral part of many industries including construction, manufacturing, medicine, food, farming etc. Therefore, the efficient management of supply chain and logistics is a key consideration for many organisations. While certain organisations may opt to operate and in-house logistics function, many outsource it to specialist companies such as interstate transport companies Sydney.
Importance of Logistics
Well-implemented logistics functions result in the increased efficiency of the entire business process. Logistics, as an important component of the supply chain can directly influence everything from inventory management, order processing, and purchase control to delivery and returns. Successful implementation of logistics systems results in lower costs, higher production rates, and better control systems for an organisation which culminates in an improved customer experience and hence profits.
As transactions are the backbone of any business, logistics allow businesses to conduct transactions with a wider reach. Logistics in essence is the physical fulfilment of a transaction, and the process allows the goods from the seller to reach the buyer safely and quickly. For certain businesses, logistics are an integral part of their core business function. Such businesses often have their own in-house logistics department tied to their supply chain operations.
Reach is important to a business and transporting goods across national borders and throughout a country is often difficult and expensive. A well-designed logistics system can streamline the delivery process and allow the business to deliver to their customers regardless of where they are.
Outsourcing
Logistics is one of the most often outsourced functions of an organisation, primarily because it is not one of the core functions of most businesses. Additionally, the maintenance of a dedicated logistics functions usually entails the possession and maintenance of a fleet of vehicles, warehouses for storage and security concerns which can become expensive depending on the industry. Therefore, the costs of maintaining an in-house logistics department can get out of hand quickly, especially if the organisation in relatively new.
Hence, the logistics function can be outsourced to specialist organisations which essentially transfers the risks of owning and maintaining the fleet of vehicles, training, turnover, insurance risks of drivers etc. over the service provider and allows the organisation access to industry standard logistics functions.
The use of an external logistics provider also lets businesses make use of their delivery networks and experience to cater to customers throughout the country and across national borders without dedicating management time and resources.