What is the role of logistics in a company?

Customer satisfaction is essential to the long-term survival of a company. However, a major part of this satisfaction comes down to logistics: the company’s ability to organize its material flows to meet the needs of its end customers.

Logistics is therefore not just a service; it is a strategic function, both a lever for internal optimization and a tool for competitiveness. In this article, we propose to define the term precisely before analyzing the role of logistics in a company and highlighting its strategic and competitive importance.

What is logistics?

Logistics can be defined as the activity of a company related to the control of its physical flows. It involves the efficient management of resources so that they can meet customers’ needs. In particular, it is about coordinating the movement of goods so that they flow continuously from point A (the supplier) to point B (the end customer). A more complete definition can be found in this article.

The term comes from military language. The term logistics is used to describe the organization of the supply of troops in the field. This is a prerequisite condition for ensuring their integrity and ensuring that they can continue the campaign. The notion, therefore, has a strategic meaning from the outset.

However, logistics in a company is more complex and is not limited to the simple delivery of goods. It includes both material and information flows.

Material flows

Two material dimensions can be distinguished within logistics:

The technical dimension

This includes current activities such as

• the transport of goods,
• storage,
• handling,
• packaging,
• and delivery to distributors or customers.

It takes into account the use of transport vehicles or machines, the layout of the premises, the management of returns, the security of goods, etc.

The functional dimension

This gives logistics in a company a cross-cutting role: the aim is to optimize the product flow network to guarantee both :

• the quality of goods
• speed of delivery,
• and cost rationalisation.

Information flows

For material flows to be possible, logistics in a company must be crossed by information flows connected to all the departments and/or service providers in the supply chain.

These flows are essential because they enable orders to be placed, goods to be acknowledged, or information to be provided at any time on the state of stocks.

The information flows are managed by appropriate software that ensures the transmission of data. They also ensure good communication between the links in the logistics chain. They help to forecast needs for greater efficiency.

What is the role of logistics in a company?

Logistics occupies a very special place in a company. Firstly, it is essential as soon as the organization is based on material flows. Secondly, it is an integral part of the value chain. Finally, it’s also a function, in the sense that it is transversal and concerns all departments.

Logistics: a central role in the company

The role of logistics in a company is therefore central, insofar as it affects all departments and influences the overall performance of the organization. It is a strategic lever in itself, an added value.

This concept is recent: thirty years ago, it was still considered a secondary function. But today, this function is at the heart of the company’s commercial stakes, as it has an impact on production, delivery, stocks, and finances.

This centrality is further reinforced in-network companies, which outsource a large part of their activities. The fewer activities a company undertakes on its own, the more important logistics are to its operation.

Logistics as a strategic lever

The role of logistics in a company makes it a strategic lever, both to better manage its production, to satisfy its customers more and more, and to reduce its costs.

Better management of production

By optimizing its logistics function, the company manages to organize each task in such a way as to handle it more efficiently and save time. This is made possible by the automation of processes. This is a win-win situation. Employees are freed from recurring tasks with low added value and have better tools to work with. While management can control product quality more efficiently and rationalize costs.

Improve customer satisfaction

By virtue of the fact that logistics in a company is concerned with supplying specific products to targeted users, this process is naturally the lever par excellence for customer satisfaction. A quality product, in stock, which arrives in good condition and as soon as possible, guarantees customer satisfaction and loyalty.

Reducing costs

Optimizing the logistics process in a company helps to make significant savings at all levels; purchasing management (comparing product and raw material prices); stock management (reducing the invoice by limiting the space needed to store goods); and delivery management (finding distribution solutions at the best price, without cutting back on quality).

Logistics as a competitive tool

The role of logistics in a company is also competitive. In the context of “chrono-competition”, the “time” factor has become a major parameter of comparison between service providers, and therefore satisfaction for the end customers.

In fact, optimizing the coordination between the departments involved in logistics makes it possible to pursue a common objective: to deliver faster, in the best possible conditions, and to satisfy customers.

The search for flexibility is part of this competitive perspective. The logistics chain must adapt to a growing need for agility. This is necessary to maintain a competitive advantage; it is a question of placing orders at the right times to meet consumer needs in a relevant manner.

To conclude on logistics in a company

The role of logistics in a company is, therefore, both central and transversal. Nevertheless, this function is always part of a more global process, that of the supply chain. It is therefore the entire logistics chain that must be optimized (via Supply Chain Management); in order to achieve optimal results.

Would you like to know what are the tangible benefits of good logistics in 2022? The answer is in this article!

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