Logistics is a key concept to get right for any business looking to increase market penetration, supply effectiveness, lower costs, and deliver a higher standard of support to end users. So, let’s get into it.
Logistics is the activity or process for the transportation of goods. The activity of logistics can be as simple as one item being shipped locally (within a country) or as complex as managing multiple distribution partners and suppliers internationally to execute multiple (and continuous) importing and exporting of goods.
Issues such as disruptions in shipping can cause big problems for the flow of logistics and the overall supply chain for any business. Figures suggest that up to 20% of revenue can be at risk through poor logistics. This means that for those willing to find ways to get it right, the rewards can be huge.
Logistics plays a small part in the end-to-end solution provided by TecEx, so please get in touch to find out the part we play in global expansion for the world’s leading tech brands.
What We Will Cover
- Introduction to Logistics
- The Role of Logistics Across Business
- The Steps Involved with Logistics
- DDP and Logistics
- Impact of Bad Logistics
- TecEx Client Logistics
- What Our Logistic Solution Can Look Like For You
An Introduction to Logistics
Logistics can impact every part of a business. If managed correctly, logistics are an invisible glue that bonds a business’s infrastructure together. However, if, managed incorrectly, they can cause financial, time, and even people issues on a mass scale, leading to problems that could have been avoided and a reputation that will need to be rebuilt.
Logistics draw on key services from transportation, storage (or warehousing), project management, compliance expertise, and financial transactions. The key is ensuring all parts work together and ultimately have backup plans to cover every eventuality.
In general terms, logistics refers to the portion of a business’s supply chain that it is in control of. Supply chain refers to the wider network of activities, including the conversion of raw materials into finished products; many elements within this process are out of the business’s control.
Logistics and its Role Across Businesses
Supply Chain Management
Logistics plays a core role in the broader supply chain, this includes ensuring materials and supplies are sourced efficiently, the transportation of goods is executed seamlessly between manufacturing and warehousing, the storage of goods until they are required, and the delivery of products to the end user.
Tech companies, in particular, need to have a water-tight supply chain to ensure demand is met when it matters most. Failure to get this process right can lead to potential downtime across essential server networks when high bandwidth matters most. The ever-increasing demand for chips across multiple verticals across the tech sector means supply chain management is the key to success.
Inventory Management
The correct management of logistics enables a business to ensure the appropriate amount of stock is where it needs to be when it needs to be there. This can be critical when data centers are relying on being able to grow their capabilities to deal with additional load or new client demand.
Managed correctly, this can reduce waste, mitigate risk caused by incorrectly managed inventory levels, and ultimately drive efficiency and lower overall cost. These savings can be re-invested into further growth and therefore faster expansion.
Customer Satisfaction
End-user satisfaction is driven by fast, accurate deliveries, ensuring whatever items are needed are in the right place at the right time.
A high standard of logistics can create a unique selling point (USP) for a business in competitive landscape. Being capable of delivering products on time can be the most pivotal requirement of a fast-paced industry such as telecommunication
Cost Control
Regular cost analysis within the logistics process can help businesses identify where reductions can be made with little to no impact on the outcome. This drive for logistic excellence can allow businesses to be more agile when it comes to price sensitivity for buyers. Regular reviews of suppliers and carrier contracts allow the best possible rates and volume discounts.
Quality Control
By developing a quality assurance level within the logistics process, businesses can create strategic advantage through excellent service and delivery of products. This is driven by a deep understanding of packaging, storage, and movement of goods.
Globally, this can be one of the most important steps a business can take, with many countries having differing regulations on what is and isn’t allowed in, how items must be packed, and vital information displayed.
Risk Management
Removing risk through planning is essential, these plans can reduce issues such as transport delays, supply shortages, and disruption in the production process.
An example of how issues
can occur in the logistics process is the bottleneck in the supply chain
created in the Red Sea. Through good planning and risk management, several companies could have thrived by having backup shipping lanes that could have been utilized while the issues in the Red Sea unfolded.
If you’re interested in seeing the potential risks involved with your shipments, check out the TecEx Risk Calculator, and ensure you manage any risk quickly and effectively.
Integration with Technology
Technology has played a pivotal role in the development of logistics and, indeed, the wider supply chain. Advancements in warehousing technology have led to quicker turnarounds and a decrease in time-delayed mistakes. The development of technology for resource planning and transportation management has also driven a stronger operational standard throughout industries where logistics plays a key role.
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The Seven R’s of Logistics Management
Logistics management (the seven R’s) refers to getting the right product, at the right quantity, at the right time, in the right condition, to the right place, and to the right customer, at the right cost.
The Impact of Bad Logistics
Bad logistics can have a large impact on general business operations. In 2020 close to 60% of North American and European companies said they lost up to 20% in revenue due to logistics disruptions.
Communication
Poor communication within the logistics process can have a significant impact on the overall supply chain. This can include late deliveries, lost inventory, increased costs, bad reviews, inability to plan inventory, and poor forecasting. Having clear channels of communication and plans to cater to any potential issues is vital to ensuring logistics performs well.
Technology
If the right technology mix is not applied within the logistics process, it can lead to slowed operations, increased costs, difficulty scaling, and potential delivery issues. As technology continues to develop, businesses must evolve and adapt.TecEx constantly analyzes new and emerging technology to import and export globally.
Bad International Shipping Plans
Shipping plans, when developed correctly, can mitigate several potential issues, such as unforeseen disruption or shipment damage. Not having a good international shipping plan can lead to untimely deliveries, increased costs, poor productivity, customer churn, and an inability to scale. Good shipping plans are usually developed by individuals within businesses who understand the specific needs and local nuances involved.
Packaging
Packaging, as trivial as it may sound, can disrupt the logistics process. Poor/incorrect packaging can cause issues such as product damage, reshipment costs, damaged packaging, customer dissatisfaction, and higher shipping insurance costs.
Lack of Local Understanding
One of the most valuable assets within logistics is the local, national, and global knowledge of tariffs, packaging, legalities, and compliance. A lack of understanding of the logistics process caused by a skills shortage, poor communication, or overall poor supply chain management can have a knock-on effect on customer retention.
DDP Logistics
Delivered Duty Paid (DDP) is a common incoterm and essentially refers to the responsibilities of a seller and buyer within a trade contract. In essence, the seller takes responsibility for all risks and fees of shipping goods until they reach their destination. Therefore, logistics management becomes key when considering the additional factors involved with the movement of goods and their potential costs when they reach their port of entry to a new country.
Import duties can differ from country to country, among other factors, so the amount due may not be known until the shipment arrives at the destination. This can cause issues when plans or timeframes have been developed around a delivery date. Getting the right partner to handle the logistics, compliance, and duties involved for any country you’re shipping to is integral to success.
Logistics At Play
Logistics plays a large part in a company’s supply chain strategy. While it can deliver a best-in-class service for those who get it right, the pitfalls are clear when it comes to global expansion. Getting a clear understanding of the tariffs and potential issues within each location is essential to being able to ensure several of the seven R’s are covered, especially the right time and cost.
If you’re experiencing any of the issues highlighted or considering a global rollout, TecEx is the only choice to ensure you get the 7Rs covered with the added benefit of liability cover being available for additional peace of mind.
TecEx
TecEx is a global leader in ensuring your valuable goods are delivered quickly and pass customs at the first time of asking. This gives you peace of mind and helps ensure fast-paced growth that exceeds the abilities of the competition.
Still unsure if we can help? Take a look at our case studies for real-world examples of how TecEx can help any tech business navigate the difficult logistic waters.