What Is Logistics?

What Is Logistics?
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What Is Logistics?
Transport Issues

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Logistics is essentially getting something from A to Z as quickly as possible with the lowest amount of costs and disruption. The trouble generally is in getting from A to Z, you have to encounter the rest of the alphabet.

The general consensus regarding logistics is that it is concerned with transportation issues only. However the term logistics has been applied to people involved with production control issues.

In the context of this section of the web-site we shall be briefly discussing logistic issues on the transportation side.

TRANSPORT ISSUES

Logistics in terms of transport covers transporting goods from the business to customers. Your business may well have it's own transport to move goods locally to suppliers and customers.

The problem with having your own business transport, is the costs of maintaining the transport. As the business grows there will be the need to extend transportation regionally and nationally. This all entails extra costs if your business maintains it's own fleet of vehicles and the costs of buying/leasing, servicing, petrol and staff to run the vehicles.

The trend in logistics which has been in use since the early 1980's is the use of couriers. Your business either absorbs the cost of transportation to customers, or make them pay a charge. With national courier firms it is possible to negotiate set pricing contracts, but in general national couriers will set a price based on the weight of the package and the destination.

If your business is of large enough size with enough of it's own transport vehicles, it is worth considering the use of transportation contracts with courier companies such as DHL, TNT. These transportation contracts would be where the courier companies would handle your business transportation issues, they can prove to be very lucrative to both parties. If you look at the business perspective you do not need to purchase vehicles, and the associated costs, whist for the couriers it is additional work the potential for extra profit.

Transportation contracts work on the basis that your business presents your current transports to a courier such as TNT, who then review the data and give you a much lower transport figure, the logic is that your business would accept the figure and the savings made by the business would be shared by the business and the courier company. A numerical example would be if your existing transport costs are £2 Million, a courier like TNT would offer you a contract to do it for £1 Million thereby generating a saving of £1 Million, if this figure is achieved then your business would give TNT £500,0000, still saving itself £500,000.

Transport is a very important area of business strategy which must not be overlooked, it is no use producing products in a timely and efficient manner, if you cannot get the product to your customers when they demand it. Sort out your transportation issues as soon as you start manufacturing and not as an afterthought.

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