The Importance Of Logistics In Business

821 Words 4 Pages
Logistics is a very important part of every business, it involves the flow of goods from the time the raw material is purchased, up until the time the finish product reaches the shelves of the retail stores. Almost every major business has gone global, and they are doing so because it gives them a competitive advantage in the market. Companies are moving their factories to countries where labor is cheap so the price for producing the item is a lot lower, and because of this increase globalization the demand for effective, and efficient logistics is even higher. Producing goods on the other side of the globe has increased the stress on today’s logistics, companies have to find ways to get the product the customer on time, and at the cheapest …show more content…
The generations of customers born into today’s society will always expect standards to continue to improve, and companies have to cater to these expectation. People who order online in the early 2000’s would have to wait almost seven days for their order to arrive to their home, today amazon.com provide next day shipping to a large percentage of its customers. Amazon didn’t just settle for next day shipping, they want their customers to receive the item they ordered even faster, and now they are on the verge of using drones to deliver items to customers within 30 minutes of placing an order. Amazon is doing this through their prime air service, “ Prime Air is a future delivery service that will get packages to customers within 30 minutes of them ordering it online at Amazon.com. The goals we’ve set for ourselves are: The range has to be over 10 miles. These things will weigh about 55 pounds each, but they’ll be able to deliver parcels that weigh up to five pounds”(Pogue, 2016, para.5). Drone delivery is a prime example of how companies are staying ahead of their competitors and keeping their customers …show more content…
In this competitive business environment, the ability for companies to cut cost always gives them the advantage. Third party logistics is the kind of collaboration that aids in the reduction of shipping cost for some businesses. The spirit of collaborating with 3pl has lead to increase efficiency in the world of logistics, and that’s because instead of companies taking up the logistics role by themselves, they now have a shipping expert conducting shipping activities for the company. “To differentiate themselves, 3PLs are working to provide sustained value, innovative solutions and information to facilitate data-driven decisions. 3PLs are also using technology and data to aid shippers in selecting the right shipment modes to maximize efficiency and reduce costs”( Collaboration Is Key, 2015, para.6). The resource used to invest in new technology, and innovation to conduct logistics can be extremely expensive, for companies, that is money that can be used to develop the company’s primary product instead of spending it on finding innovated way to operate their logistics. Collaborating with a 3pl eliminates that headache. 3pl collaboration also means that cost of shipping is shared with other companies using the same 3pl company, and that results in less empty shipments which also same money on shipping. According John Langley, director of development at Penn State’s Center for Supply Chain

Related Documents