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Supply Chain Management: The Role of Logistics and Creating Net Value

What is the first thing that comes to mind when you think about the term “supply chain”- a process that provides On-Time delivery at the most economical pricing, right?

The most common misconception is “economic means the cheapest.” Supply chain as a whole is about creating net value to the company’s business strategy in which logistics plays a significant part. If the company’s competitive edge is fast delivery like Amazon, then the logistical cost is going to be higher, but the service is reliable, and consumers are willing to pay that extra cost in return for comfort. This example is real in almost all industries - medical supplies, oil and gas, food, etc.

This puts extreme pressure on logistics as they’re expected to make up for the extra time production and manufacturing consumed in the overall order fulfillment cycle.

As a company, decision-makers must have a sound business strategy, a good understanding of the company’s goals, and industry behaviors/standards. For example, organic food sellers, the shelf life of their products is not long, and Just-In-Time (JIT) delivery is essential - this means the products are made available at the right time to provide the most time for a sale to the end consumer. In this case, they cannot wait for a Full Truck Load to ship products but will have to have many milk runs – with this strategy, they will need to have increased profit margins to cover transportation costs. Similarly, if they are a company that is not worried about JIT delivery (such as Tesla, where cars are shipped post-selection and ordering), they have a larger range of options where multiple services can be offered based on need dates and transportation costs can be lower.

When a company reaches a level of maturity where priorities are well known, strengths and weaknesses are identified, they’re in a position of choosing if logistics as a department is worth the investment.

In this global era of industrialization, where 7.66 billion people are connected, logistics is no longer an extra cost but is a value-added service - As long as your goals are aligned.

Allyn, with a diverse client base, possesses strong knowledge of different industries and will be a strategic partner instead of just being a service provider. Reach out to us at consulting@allynintl.com for personalized solutions to your business needs.

Contributor: Ansaar Khan 


About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com.

 

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