Posted On October 16, 2023
Excellent products that appeal to a lucrative target market can get you far. However, they can only get you so far. Paramount to any modern business’s success is the ability to execute, and that’s where many organizations fail. In fact, around two-thirds of business strategies fail because of subpar execution. Specifically, effective logistics planning is a crucial component to ensure that your products get as far as possible (pun-intended) conveniently and cost-efficiently.
In this article, we will explore what logistics planning entails and how to apply it strategically to drive business success.
Defining A Logistics Business Plan
So, what is logistics planning?
It focuses on delivering the correct products to customers at the appropriate time. A primary aim is to keep costs at a minimum.
The overarching goal and importance of logistics planning revolves around lean, budget-friendly operations.
Moreover, logistics planning calls for maintaining a consistently high service level while withstanding all supply chain disruptions.
All merchants will have unique approaches, but there are general universal structures to all logistic planning systems.
Logistics systems (e.g. shipping, production, and procurement) must be considered. Each method has logistical functions requiring planning. These entail inventory management, warehousing (and a warehousing business plan), returns, raw material handling, etc.
Typically, a company has a director of logistics who oversees these planning processes. They might collaborate with other key stakeholders or a third-party logistics planning and management services company.
What Should Be Present In A Cohesive And Strategic Logistics Plan?
Here’s an interesting fact: When supply chain costs get reduced from 9% to 4%, it’s possible to double your profits. What’s more? Successful planning reduces supply chain costs.
Still, there’s a wide gap between introducing the concept of logistics planning and establishing a profitable, productive process. Thus, getting granular is absolutely critical, calling for the following components in your overarching logistics plan:
- Develop a general logistics strategy overview and define how it’s connected to other organizational functions.
- Include a breakdown of each logistics plan (e.g., implementation costs/impact on other business functions and timing).
- Incorporate order processing/fulfillment, inventory/warehousing, customer service, and transportation into your logistics planning strategy.
- Establish a list of logistics-related objectives and relate them to services and costs for the customer and product.
- Create requirements forecasts for capital, workforce, and all other logistics-based necessities.
- Perform a business impacts analysis, describing the projected impact on business functions, profits, and customer service.
- Make a financial statement detailing operating costs, cash flow, and capital requirements to clearly convey the financial picture to stakeholders and executives.
What Are The Advantages Of Successful Logistics Planning?
Here’s a list of the critical advantages offered by successful, sound, and strategic planning:
Logistics planning mitigates spending bloat that reduces revenue. You’ll gain the foresight to avoid expensive solutions you’d otherwise pay for out of convenience. Instead, you’ll be able to leverage cost-effective supply chain solutions because you’ll be one step ahead.
Through strategic logistics planning, you’ll have historical data to examine and analyze, enabling you to optimize route efficiency and decrease fuel costs. Also, you can maximize asset use, save operational costs, and boost business effectiveness.
Since you’re optimizing costs, you can ship to customers at prices they can afford. Failing in this facet often leads to scaring off consumers. For instance, high shipping costs account for almost 30% of abandoned carts on eCommerce sites.
The Backbone Of Successful Scaling
Accomplishing significant business objectives and generating short and long-term profits necessitates meeting clients’ demands and reducing costs. You can do so with strategic logistics planning applied to shipping, storage, and fulfillment procedures.
A full-functioning logistics business plan ensures you remain within budget, on schedule, and aligned with customer expectations. Thus, you’ll reach short-term milestones, remain focused on long-term objectives, and be prepared for disruptions with your resilient supply chain.
Bolster Your Revenue
When logistics planning is at its most optimal, you’ll likely raise your order fulfillment rate and do wonders for your profitability.
Optimize logistics planning by implementing upgraded technological advancements, enhancing fleet capacity utilization, and leveraging route optimization tools.
Financial savings and increased profit margins will be most significant if you remain on budget and keep supply chain costs low.
However, handling all the nitty-gritty of logistics planning in-house can feel like an uphill battle. Rather, consider working with a 3PL (Third Party Logistics) company like Flat World. Our proprietary tech and unparalleled industry know-how will enhance your supply chain visibility and foresight (and much more!)
Contact Flat World today to learn how we’ll keep your business moving forward.