SMEs need to upgrade logistics approaches

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Bikky Khosla | 06 Sep, 2011
Logistics is one among many areas where most small and medium enterprises (SMEs) lack a systematic approach. But it can be used as a potent tool for developing a position of sustainable advantage. In fact, marketing experts view logistics as "the other half of marketing" and suggest to use it with marketing in a way that can maximise customer satisfaction while minimising cost. SMEs, by putting some more effort on logistics improvement, can garner huge benefit in marketing.

Before being widely used in the business world since the early 1990s, the word "logistics" primarily had a military definition. In wars, when soldiers moved from their base to a forward position, logistics was necessary to supply men, materials and facilities there. As in the case battle fields, modern day businesses need a suitable logistics plan to manage the delivery of goods to the buyers, which is, needless to say, the ultimate goal of any marketing activity. For exporters, a crucial part of their trade is the timely delivery of goods. In fact, an overseas buyer may be willing to pay even higher prices for timely delivery of goods.

While most of us know the fact that an agile and responsive supply chain is crucial to ensure improved customer satisfaction, it is also important to see logistics as an integrated approach in which order processing, warehousing, inventories, transportation, and information system are considered as an unified whole and not as separate parts. Our businesses often fail to adopt this "Totally Integrated Logistics" approach, which is still in a nascent stage in our country.

More importantly, I feel, Indian SMEs hardly go for a systematic logistical information system (LIS) that encompasses a range of activities â including order processing and transportation, inventory and labour productivity, carrier selection and warehouse planning, and finally setting of long term goals â and which can be of immense use in controlling costs and improving services and overall performance of the marketing distribution system.

SMEs often learn logistics themselves. Unlike their big counterparts, they cannot afford large scale logistics operations and many people to carry out these tasks. It is why they have to think smart and act nimbly. In today's business world, logistics has emerged as an integral part of a firm's corporate strategy. SMEs need to be aware of the modern day approaches of logistics planning in order to use the twin arms of marketing and distribution to maximise the value added through customer satisfaction and better services at lower cost.