Mark Dohnalek | April 25, 2017
If you’ve got a great new product, but you can’t get it into the hands of your customers, then that product doesn’t stand much of a chance – no matter how amazing it may be.
This is where logistics and supply chain management come in. Without effective management of these two vital business areas, no product – or product-based business – can survive.
Here are just a few of the impacts that effective logistics management (or the lack of it) can have on your product-based business.
Effective logistics allows your business to scale appropriately
It’s counterintuitive, but plenty of businesses fail not because their product is unpopular. In many cases, the opposite is true: the product is hugely popular, but the business is unable to keep up with demand.
Orders pile up, customers get upset, and the business gains a reputation for providing poor service.
This happens when businesses don’t have the systems in place to ensure that they are able to move products quickly and efficiently from the warehouse to the customer – even if you suddenly get 500 more orders in a week than you usually do.
It’s easy to think that that kind of explosive growth won’t happen with your product, and that you’ll have time to get those systems ready. But what if a video demo of your product goes viral? What if a major influencer posts a stellar review of your product?
Before you know it, you may have people from across the world demanding what you’re making, and that’s a golden opportunity. You don’t want to lose it by not being able to deliver.
As you expand, costs will naturally grow. Logistics can help you control those costs.
If you’re taking your business from regional to national, or national to international, your associated costs are going to grow. Shipping rates will go up. You may have to do additional testing or get special licensing to comply with another country’s regulations. You may need to hire more people to meet demand.
Inefficiencies in any of these areas can add up to millions of dollars in lost revenue or higher costs. Logistics can prevent this by keeping all the different physical components of your product headed where they need to be.
The materials in your supply chain will flow smoothly to the manufacturer.
Your manufacturer will get the finished products directly to the distributor.
The distributor will get the finished products into their various modes of transport quickly and accurately.
And finally, the transport vehicles, whether those are shipping containers, trucks, planes, or delivery vans, will get those products to their final destination.
Employing a firm that specializes in logistics or supply chain management can greatly increase your rate of success.
Small and large businesses alike can benefit greatly from working directly with firms that specialize in logistics or supply chain management.
These companies have the software, contacts, and industry knowledge that is so important in developing effective logistics systems.
This can be especially helpful if your manufacturer is located across the world from you and your business headquarters.
Working with a manufacturer in Asia, for example, requires a major investment of time and effort. If a company cannot establish a physical presence in the manufacturer’s country, even if temporary, then it may be even more important to employ a logistics firm that can handle all the tiny details.
Logistics and supply chain management are crucial to the success of your product – and your business. Without these two business elements, the only thing you’re sure to get is unhappy customers. To learn more about making your business succeed, read my post “Business Trends Driving Growth for Product-Based Businesses in 2017.”
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