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Logistics

Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from the point of origin to point of consumption for the purpose of meeting customer requirements. It gives firms the competitive advantage of delivering the product faster and more reliably. For example, Dell Computers achieved competitive advantage because they could deliver computers in 24 hours fitted with the specific hardware and software each consumer requested.

Logistics potentially involves the entire value chain from raw materials to intermediate product to final product to consumer. Marketing, logistics and production must be inextricably linked to achieve a market edge. Technology and information are enablers to effectively market, produce and deliver the finished goods. The goal of logistics is the right goods, at the right place, at the right time, in the right condition, in the right quantity and at the right price.
Logistics companies can create wealth by:

  • Revenue growth: superior customer service in terms of reliability and responsiveness lead to higher sales and customer retention
  • Operating cost reductions: savings in transport costs, warehousing, information systems and reduced inventories
  • Working capital efficiency: faster collection of payments and lower inventories free capital for other investment opportunities; decreasing the time in the logistics chain when no value is added reduces working capital requirements
  • Fixed capital efficiency: logistics is capital intensive and the opportunity to reduce fixed assets through better utilization reduces fixed capital cost significantly

Logistics handles a variety of functions including demand forecasting, facility site selection and design, procurement, materials handling, packaging, warehouse management, inventory management, order processing, application of information technologies, transport, waste disposal, return goods handling and parts and service support. Logistics is the means to an end.

Seeking an international logistics partner to develop facilities and provide the training and TA as part of a joint venture is probably the best way to achieve developing economy objectives. It ensures the sustainability of technology transfer and connects the facility to an overseas logistics network. The government may need to offer some incentives and support to reduce the risk. In addition, donor support for training and capacity building may be identified in the context of over all support to a corridor management initiative or regional program, such as the Greater Mekong Sub-region program being supported by the Asian development Bank. Another example is the CATS Program in Namibia.