Top 3 Benefits of a Solid Supply Chain & Logistics Strategy for Businesses

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Large companies in the logistics and warehouse market require strong logistics solutions and a solid supply chain.

This way the companies understand their suppliers better and manage to optimize their shipping process.

By using logistics strategies, they can reduce spoilage and reduce overall spending on costs.

Logistics managers understand the needs of their customers. By doing this they manage to plan better routes to reduce operational costs and increase the fulfillment rates.

So, what are the benefits of a solid logistics strategy for such businesses?

1. Logistics Strategies are essential for Inventory Management

Benefits-of-Supply-Chain-StrategyAside from product management, logistics also consists of inventory management. To keep track of the products in stock and meet the needs of the customers, proper planning and management of production and storage spaces is essential and shouldn’t be skipped.

Delayed products can decrease the long-term viability and profitability of a company’s supply chain. That’s why product management is critical. Nevertheless, a small company’s main target of design and production might not be sufficient to meet the client’s needs.

2. It protects the environment and prevents the Spoilage of Food

supply-chain-planningEven though transportation is a key element to the success of a supply chain, it might not be optimal. When large quantities of goods are shipped on slow transportation forms, a company might get a bad response from its customers and lose business.

If we think about perishable products, things get even more complicated, and cold chain logistics play a very important role here. These time-sensitive products require refrigerated transport services, special warehouses, and good boxed packaging to maintain their quality.

Have you ever found it interesting that the shelves in grocery stores are stocked with blueberries and watermelons even during the winter season? Out-of-season products can’t resist New England’s harsh climate. Where do these come from? – From farm thousands of kilometres from your local supermarket.

We are aware that moving food over such great distances has a significant impact on the environment, but don’t forget about supply and demand. Someone is willing to deliver tropical fruits in mid-February when there is a demand for them.

For the time being, ignore the large carbon footprint necessary to get a food supply from A to B and consider what happens if the transport fails. Consider the idea of a cooler that fails, or that no refrigeration was used throughout the entire transportation. When you throw food away, it does not simply “disappear.” It decomposes in landfills.

Food that needs to be refrigerated has a high concentration of essential vitamins and minerals. Many people around the world don’t have access to these essential minerals.  When done properly, cold chains allow perishable goods to be transported hundreds of kilometres without losing their quality.

Logistics plays an essential role in a company’s supply chain. It doesn’t matter if you’re a direct-to-consumer brand or a direct-to-manufacturer brand. Another significant aspect of logistics is time. The timing needs to be right, otherwise, the logistic process will fail. Companies need to have their products ready for sale when requested.

When a product is not in stock and the delivery is delayed, customers tend to switch sides and go look for their products from other competitors. That’s why logistics managers must have an efficient monitoring system and constantly communicate with the delivery team.

3. It allows Companies to get to know their Suppliers

Advantages-of-Global-Supply-ChainCreating a good logistics strategy and a solid supply chain is a key element in a company’s business strategy. If you get to understand how customers and suppliers work, you can build backup plans and use them efficiently when things don’t go well.

This way your company will become more profitable. Some companies also decided to cut their inventory by up to 22% and strengthen their bottom line. To measure the effectiveness of your supply chain, you must track certain metrics. These metrics help you prioritize activities. Some are mandatory to meet the regulatory requirements, and some help you track efficiency and service, leading to higher profits.

A metric alike is the fill rate, which is the number of orders fulfilled, in an established time frame.

A powerful supply chain and logistics strategy allows you to know your suppliers and ensure that customers’ needs are met. Coming up with a logistics strategy also allows you to redefine the relationship terms with the suppliers.