How does a company build its own logistics system

For many companies, the importance of the logistics system has become more and more prominent. Capital flow, logistics, and information flow have become topics that many corporate executives often talk about. Some companies think that the complete logistics business to EMS will be everything; some companies simply invest in building warehouses and teams themselves. However, how to build a logistics system that suits the characteristics of the company itself is not as simple as that. The “own logistics system” mentioned here does not necessarily mean that a company has its own logistics system, but refers to the logistics system that the company can adopt.

Clear the main role of logistics management in the enterprise

The role of logistics management in most enterprises is mainly reflected in the realization of business, customer service, improving profitability and capturing customer information.

Realization of business

All manufacturers or distributors cannot avoid the product from point A to point B if the product it provides is in a physical form - this seemingly simple problem. Only by completing this process will the company realize sales. Of course, this process may not necessarily be implemented by the company itself. The most extreme example is the customer's own mention. But we must admit that this is just for the customer to complete this process. In most cases, the customer may not use or consume the product locally at the manufacturer's or dealer's door (or warehouse). Even in industries such as catering or maintenance industries, the establishment of a restaurant or maintenance site determines the logistics management of raw materials.

customer service

As enterprises are not satisfied with the realization of business and factors of market competition, good logistics management is increasingly used as a means to improve customer service standards, thereby increasing the market competitiveness of enterprises. This is mainly reflected in the reduction of out-of-stock rates, and shortening the cycle time from customer ordering to receiving, thereby increasing customer satisfaction. Once the company has determined the target customer level, it can achieve this goal through a series of logistics management tools, such as increasing or bringing the inventory point closer to the customer, shortening the order processing time or increasing the delivery frequency, and speeding up the transportation time. .

It is very important that the company must carefully evaluate whether the company's logistics management system can be stably implemented and whether it can really bear the cost pressure brought by it. For example, the product delivered this promise within one hour after ordering, not the fastest delivery time is one hour, but may require that at least 85% of delivery must be satisfied within one hour.

Improve profitability

Under the premise that the realization of the business and the level of customer service can be tolerated, the company can reduce the cost of the product or marketing by integrating its own logistics system. The costs throughout the entire logistics system often include: the capital cost of inventory (mainly reflected as the main financial cost of interest), transportation costs, warehouse rental and expenses, human resources costs and information processing costs. Due to the limitations of the organizational structure of the company and the importance attached to logistics management, the above mentioned costs or expenses may be managed by different departments. Once the overall goals of the company are not clear enough or the coordination and communication between departments is not enough, or for the benefit of departmental standardism, there is often a decrease in one of the costs (or expenses) and an increase in another cost (or expense). Case.

For example, Beijing's X Company has a branch office and warehouse in Chengdu. As the company's management has placed more emphasis on controlling the shipping expenses of the storage and transportation departments, the storage and transportation departments have taken pressure to adopt the rail transportation method. Chengdu's average order-receipt cycle time is 13 days. In this way, the company's inventory planners set Chengdu's warehouse inventory levels, taking into account the instability of the transport cycle and the market forecast instability and necessary safety inventory, the Chengdu target inventory is set to 18 days. They believe that only in this way can we ensure the company's customer service policy for the Chengdu market. Because of the high value of the products that the company operates, they have to face the pressure of a large amount of inventory on the occupation of working capital. This has aroused the attention of senior management of the company. After considering the logistics system as a whole, they decided to adopt the air transport mode and reduce the target inventory in Chengdu to three days. After calculation, the increase in shipping costs is less than the cost savings of the reduced 15-day inventory.

Capture customer information

Through the changes in inventory or the process of order processing, companies can also grasp the customer's product preferences and purchasing power in a timely manner. The timely capture and classification of this information can help the company’s management to keep abreast of the customer’s trends and adjust their strategies in a timely manner.

Build your own logistics system

Determination of goals

As mentioned before, enterprises must establish their own goals in order to build their own logistics system, and this goal must meet the development goals of the entire company. Simply put, it is to focus on profit, market share, sales scale or any aspect of customer service. In most cases, it is difficult for companies to balance these goals within a certain period of time and market.

Formulate appropriate strategies

The strategies related to logistics management mainly include marketing strategies, customer service policies and inventory policies.

Develop supporting operating procedures

The operational processes involved in logistics management mainly include the following aspects: sales forecasting, order management and order processing, logistics planning, warehouse management, transportation management, procurement, sales channel management, and information processing.

Evaluate your own resources

Even with clear goals and well-conceived strategies and sound operational procedures, if the company’s own resources (mainly financial and human resources) cannot support it, the above operational procedures, strategies, and goals must be corrected to suit the actual situation. Happening.

In fact, after most of the above steps have been taken, most companies will find the limitations of their own resources and cannot fully consider all fields. It is precisely because of the social division of labor in the human society that it is possible for companies to seek to fill in areas where they are innocent, powerless or have no advantages. As the saying goes, "There has been a succession of stories, and there are specializations in several industries."

However, when choosing a third-party service, it is important to consider whether it can meet the needs and requirements of the company. Third-party logistics is often based on its scale advantages or professional technical advantages, and can achieve the company's goal of logistics management.

Control of the implementation of the logistics system

The establishment of a logistics management system must be controlled through the implementation of routine work in order to ensure that the entire system operates in the direction set. Just like a doctor's diagnosis, companies need to set business metrics across different sections of the entire logistics system. Through the accumulation of daily data records or regular data collection, the completion of these indicators is calculated to monitor the operation of each link. In addition, through monitoring the actual work, we can also see the deviations that enterprises consider when constructing the logistics system, so that they can adjust in time and constantly improve the management level.