Logistics is the management system that facilitates the delivery of raw materials, manufactured items or other physical goods. More detailed definitions of logistics might talk about storage, supply chains and distribution channels. Every business that ships small packages or heavy freight can benefit by paying careful attention to logistics.
Bottlenecks, backups and breaks
Think of a logistic system like the water pipes and plumbing in your home. When your pipes are clean and clear and you have plenty of water pressure, everything is just fine. When the water stops flowing or flows very slowly, you have a problem. Your drain could be clogged and cause the water to back up into your bathtub. A crack or leak in the pipes can reduce the flow rate, cause water damage or result in a higher-than-normal water bill. Bottlenecks on your assembly line, delivery trucks that are sidelined for repairs or any other disruptive force can make it difficult to fulfill sales orders. Supplies that are necessary for your company’s operation can be slow to arrive. Keeping the flow of products and materials moving smoothly is the reason for having a good logistics team and a well-designed system.
GPS fleet tracking
Knowing where your drivers and company vehicles are at any particular moment can make more efficient use of your fleet of vehicles and allow drivers to provide better customer service. Better efficiency leads to lower costs and more productivity. One way logistics managers can use GPS fleet tracking is to gather information about their vehicles, such as when an engine is running or when it’s idling. Monitor the speed of a truck and determine if a driver is spending 30 minutes or two hours on his lunch break. Such information can tell a company if their drivers are obeying the speed limit and operating safely. A company might redesign a regular route if they notice traffic patterns that slow down delivery time.
Who can benefit from GPS tracking?
Consider the following: A pizza company can keep in contact with its delivery drivers. Drivers who deliver crucial medical supplies can be tracked. Taxi cab companies can dispatch their nearest driver to a pickup site in minutes. A plumber or electrician can be followed as she makes her rounds during the day.
Cutting costs and increasing profits
A good logistics department will save a company more money than it spends. Transportation costs can be a major expense in many industries. If a company has a 20 percent profit margin on gross sales, saving $10,000 in annual delivery and transportation costs is the equivalent of making $50,000 more in annual sales.
Strategies to meet your company’s needs
- Underutilization of vehicles: A truck that leaves your dock half-empty is not being fully utilized. A logistics professional might suggest combining loads into one truck or using a smaller vehicle to deliver the freight. Cost savings can be substantial, especially with today’s high gas prices.
- Complaints about delivery time: Customer service is important in any business. If your customers are constantly complaining their orders have not been delivered on time, you probably don’t have a good logistics system in place. Reducing delays, changing the order of deliveries or adding more delivery vehicles can all alleviate the problem.
You do not need to own a fleet of vehicles to benefit from logistics. Many small and medium-sized businesses can save money by hiring a third-party logistics company. Logistics is all about getting tasks done in a smarter, more efficient way. Trimming your shipping costs will translate to a bigger bottom line.