Logistics requires your company to plan carefully. When planning, take account of the different areas of logistics. Find out how much logistics will cost your company. If you want to focus on your company’s main functions and tasks, you can outsource logistics either entirely or partially.
Logistics is the control of your company’s material, information and money flows. You can take responsibility for logistics yourself or outsource it either entirely or partially. Logistics covers several areas:
Procurement could be a one-off purchase, a contract based on a project or a long-term procurement partnership. Consider the price, delivery times and reliability, and quality.
Production very much depends on the predictability of demand and the product itself. Draw up a production strategy to guide your daily activity.
Storage is a way to improve the availability of your products. Note, however, that storage relies on tied-up capital and incurs costs.
Distribution is usually associated with transport. Transport is required for the purchase of raw materials, the delivery of products and moving waste. A good transport plan can help reduce distribution costs and improve environmental protection.
Forwarding is something that you need in international logistics.
Goods handling involves not only the movement of goods but also value-added services.
Recycling is a way to save the environment and improve cost-effectiveness.
The costs of logistics are mainly associated with transport, storage, the capital tied up in stock and the administrative costs.
Logistics costs in Finland are high due to the long distances involved. They average 14% of companies’ turnover. Most of the costs arise from transport and capital tied up in stock. Costs vary by sector and also depend on the level of service the company is aiming at.
Fuel, vehicles, and staff costs account for a major proportion of transport costs. The majority of storage costs are due to staff costs. Other storage costs are split between the costs of the building and land, equipment, and IT hardware and software.
The administrative costs of logistics mainly comprise staff and office costs.
Find out on a case-by-case basis whether or not your company should outsource its logistics.
If you attend to the matter of logistics yourself, you should always know what is happening in the supply chain. You will not be dependent on others and can work out the costs exactly.
Logistics takes up time, your company will have to have the right skills and expertise, and it causes problems for economy of scale. Your company will have to pay the costs of storage space and equipment.
If you outsource logistics, you can guarantee the standard of service and reduce delivery and packaging costs. You will not have to tie up capital in storage space and equipment. Your company can concentrate on its basic functions and tasks and growing sales. Your rates of customer satisfaction may improve, because the logistical processes are established, flexible and reliable.
If your company’s logistics are outsourced, what happens in the supply chain may be unclear to you. Your company may lose its know-how and you will be more dependent on others. Furthermore, the compatibility of information systems, data leakage and choosing a partner may present challenges for your company.