Archive for the ‘Logistics’ Category

Logistics: Cost Factor or Revenue Driver?

Friday, December 27th, 2013

There is a significant difference between companies that see logistics merely as a cost factor that should be streamlined as much as possible and those that think it’s a better idea to view logistics as a revenue driver – or at least, shall we say, a revenue enabler. I conducted my first logistics study 20 years ago. It had to do with logistical alliances in Europe, and at that time, it was already evident: Companies that employed logistics specifically to assist sales and marketing were notably more successful than businesses that invariably saw only the costs of logistics and tried to lower them because they were “bad.”
Growth does not come from lowering costs. Growth comes from the top line. And growth comes from within. If you want to look for growth potential in a business, you can’t get around logistics as one of the essential horizontal tasks. Of course, sales would like delivery capacity to be uncompromised, if at all possible. Marketing would naturally like to make overblown delivery promises. And customers all want their purchases delivered at a specific time – and everything must arrive “just in time.” The point is not to satisfy all these demands. The point is to change your way of thinking. The crucial question must be: How can logistics help us acquire additional customers, develop additional services? At the same time, how can logistics help us get to market.
That this is still an unusual point of view can be observed in companies’ systems of key-indicators, because as a rule, logistics costs of different companies are not comparable with each other. Sometimes they consist purely of shipping costs. Elsewhere, the costs of tying up capital, IT costs, overhead costs etc. are included.
At that time, through projects we were involved with, we helped Andreae-Noris Zahn AG (renamed Alliance Healthcare Deutschland AG in April, 2013), to win both the German and the European Logistics Awards in the same year. That was possible only because we changed our perception of logistics.
You don’t exactly have to win the German Logistics Award, but what are you doing so that logistics serve as a driver of growth and do not merely sit there on the cost side of the ledger.

© 2013, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.