Why use logistics planning?

Your business can minimize the costs and time expense of handling all of its business operations or investing in a new product or service offering by making sure development is guided by a clear strategy. If you’ve clearly defined your strategies for future growth and the logistics of achieving them, you can better understand what fundamental activities you need to invest in and which activities you can avoid or ignore.

By sharpening your logistical plans to improve the cost-effectiveness of your company’s core value proposition to customers, you’ll lose less on delivering the goods. Because business environments are always in flux, your logistics planning should also be fluid while keeping a clear strategy in mind.

The key elements of planning logistics and strategy

These are the core categories that all logistics planning should fit into:

• Long-term goals. These are the long-term plans that you have for your business growth. They include the markets you hope to serve, the product/service concepts you want to create, the kind of customer experience you hope to develop and the competitive edge you’d like to have.
• Short-term strategies. These are the methods by which you plan on working toward your long-term goals. They include the specific strategies and logistical steps that you use for kick-starting your long-term goals and building their foundations.
• Practical logistics steps. The functional steps to developing your short-term strategies and procedures are the immediate, functional core of your logistics plan. These include steps for improving your supply chain, achieving business objectives, anticipating industry changes and satisfying customer preferences, among other things.

Basically, your strategic logistics plan should develop your position several years down the road, but it should also cover the logistics of intermediate developments leading up to that long-term strategic position.

Key tips for logistics planning

The following logistics tips cover multiple aspects of long-term goals, short-term strategy and practical logistics for business operations, supply chain management, collaboration and customer service.

1. Make the effort to create a realistic plan

Logistics is about effective planning, and effective planning requires realism and a fair degree of precision. To make sure your logistics planning is effective, avoid unnecessary complications and establish realistic goals that you believe you can achieve. No plan will completely cover all possible obstacles, but logistics planning that stays firmly grounded in practicality can avoid many possible failures.

2. Keep logistics as simple as possible

Complication increases the possibility of business failures. To avoid this, keep all aspects of your logistics planning as simple as possible. This means finding the most direct and readily executable methods that you can for handling supply chains, meeting customer demand and working toward revenue goals. For example, if you can outsource certain parts of your operations with much less effort than it would take to handle them in-house, take this step as long as it doesn’t damage your long-term strategy.

3. Use contingency plans

No logistics plan is foolproof, and catastrophes can strike in unexpected ways. To mitigate the harm that unforeseen events can cause, develop contingencies for crucial parts of your business logistics. This applies to things like payment processing and supply chain management. For vital parts of your company’s operations, work to have logistical backups ready in case of emergency.

4. Keep your eye on long-term goals

Your logistics planning should also keep long-term goals in mind while being realistic, practical and as simple as possible. In other words, the pragmatic benefit of any logistics plan or strategy you decide to adopt should be weighed against its potential to damage a major long-term aim that you have for your company.

For example, if you’d like to make sure that your products and services are produced with maximum possible environmental friendliness, avoid locking yourself into logistics steps that damage this effort for the sake of expediency. Instead, work toward alternatives.

5. Hire a logistics manager, if possible

As your company grows, the coordination of all its management aspects will become more complicated even if you try to keep it as simple as possible. To avoid being swamped by distracting levels of logistics, consider hiring a logistics manager to handle the details across your company. This manager should be good at interpersonal relations, have strong industry experience and have existing industry contacts that they can use to help you.

6. Structure your company for easy collaboration

Modern communications tools let business teams collaborate internally and across their industry with other companies. Take advantage of these tools by making your company as open as possible to collaboration on the fly. This will be especially helpful when coordinating between internal departments for things like supply chain management and quality control. It will also be helpful for forming partnerships with third-party service providers that can help you streamline your operations.

7. Study your supply chain and product environment to make informed predictions

Your logistics planning can be blindsided by unexpected changes in your product or service environment or in the supply chain you use. If you want to avoid the potential impact of these things, learn to understand both your supply chain and your product environment in predictive ways. Becoming skilled at foreseeing changes in both will help you create strategies that sidestep potential problems with unexpected developments.

8. Assess and reassess your business forecasts

Your product demand forecasts should factor in how much actual demand you’re likely to have for your offerings and how much uncertainty there is within those demand predictions. The closer you can make the two align so that the uncertainty factor becomes minimal, the better. Assessing and reassessing your forecasts will help you achieve this, and it will let you develop logistics that are based on accurate sales predictions.

9. Refine your inventory management strategy

Keeping accurate and secure inventory is crucial to meeting customer demand effectively. Your logistics planning should include an aspect that makes sure to keep your inventory practices precise. In other words, develop strategies and systems for letting your customers order products that you actually have in stock and for knowing when and why products are becoming scarce.

10. Develop close supply chain monitoring

Behind your actual inventory of products, there is the supply chain of inputs that lets you develop and distribute them. Your logistics planning should work to keep this supply chain as closely supervised as possible. This is important for the sake of reducing waste or complexity, but it’s also important for avoiding unexpected shortages and bottlenecks from problems caused by third parties inside that supply chain. Logistics planning involves anticipating these problems with robust contingency steps that you can implement rapidly.

11. Maintain visibility

Your back-end providers will work harder to satisfy your logistics needs if they always have your business in mind. You can achieve this by making sure that you always stay on their radar as an important part of their own business. Maintain consistent communication with your supply chain partners, and make sure that they’re rapidly updated on any difficulties that you’re having with the end of your business relationship. This will help you avoid having your own customers harmed by accidental or intentional negligence by your own providers.

12. Weigh the costs of your logistics plans

The bottom line for every business is making sure that its costs don’t exceed its revenues. This applies for the long and short terms. While developing your logistics plans, you may have to take on expenses that will only be covered down the road by larger revenue and earnings, but at all times, do your best to budget your logistical strategy so it fits comfortably inside your company’s expenses. Profits should eventually be expected.