Is Logistics A Cost or An Investment?
Tuesday, December 20, 2011
Do you view your logistics needs as a cost item that needs to be managed?
Or, do you see it as an investment; an integral part of your company and overall strategy, a place where you achieve significant productivity gains?
The reason most companies view logistics as an expense, rather than an investment is because these productivity gains don’t show up directly on your Profit & Loss Statement.
There’s no line item for:
- Money saved by improved efficiencies,
- Costs saved by eliminated redundancies and work-arounds, or
- Revenue gained caused by the extra time an employee had to delight a customer.
But, rest assured they’re there – either positive or negative.
How can logistics management help in productivity gains?
There are many ways:
- By looking at workflow you can adjust inventory management to reduce the number of touches needed.
- You can eliminate “traffic jams” that can slow down the loading of trucks.
- Through planning you can combine deliveries to optimize your loads.
Every time an employee touches or moves material – it costs you money!
These organizational management functions do not happen automatically. Someone has to proactively make sure these economies are built into your systems to realize substantial savings. By working with a true logistics partner, your logistics management process can continually drive cost reductions and revenue enhancement – the ultimate purpose of any investment.