Logistics has the following functions to perform:
Maintaining Competitive Edge: Having a competitive edge over other players in the market is possible because of efficient and successful business logistics. Consumer needs and demands can be met in a more effective way with the help of an effective business logistics mechanism. As in comparison to the rival companies, a business entity must try to offer shipments of merchandise in a more perfect and quick way. Several companies have found the way Out to do so with the help of Internet.
Building Good Customer Relations: Effective business logistics is beneficial in two ways for the business namely; supplying product in a methodical approach and to help establish better relationship with the customers. This can once again help the business in two ways namely; quick earnings and better customer tie-ups implying additional business. Favourable word of mouth is one of the best techniques to promote and develop the business as customers are bound to tell other customers about the good and quality service received from the firm.
Creating Finished Product: Easy availability of sufficient quantity of raw materials to produce finished products should be ensured by the business. A business entity cannot produce quality products in the absence of quality raw materials and inputs. Adequate amount of inventory piled up is also required for the purpose of demand and supply and ultimately, to increase customer satisfaction to the maximum possible extent.
Providing Organisation: Business logistics can ensure that the process or system of production of every product is smooth and effective. Effective integration of all departments of a firm is possible when the inventory is properly tracked/followed, carried, stored and produced on a priority basis. The firm can check whether its strategies and objectives are being attained by managing a proper flow with a view that every department is aware as to what is expected and what should be done.
Promotional Strategy: When buyers are unwilling to invest money in holding increased quantity Of inventories, it is obvious that improved delivery plan is a beneficial promotional strategy. Likewise, the company is able to develop goodwill and benevolence with the vendor ms better and/or deliveries in a timely manner can be useful in receiving regular orders. Hence, an efficient and productive logistics system significantly contributes to the marketing goals and business accomplishments.
Relieves the Customers of Holding Excess Inventories: The customers are relieved from keeping surplus inventories if expeditious deliveries are ensured in least possible cost and time, All costs associated with material handling, carrying inventory, transportation and other distribution connected activities are reduced. Thus, a lot of scope is there to decrease costs and enhance customer service with the help of an effective system of physical logistics or distribution.
Basis for Trade: The very foundation of trade activities conducted worldwide and high living standards for every individual is possible because of an effective and successful logistics system spread across the world economy. Every individual and the land that he lives in are not uniformly productive. This is because there is a certain production specialty which makes one region more productive than the other. A geographical area can derive benefit of its natural resources by developing area of specialisation in those products where they have a superior position owing to an effective logistics system.
Provide Better Customer Service: Good customer service helping to enhance productivity, decreases cost and value addition to business is possible due to efficient management of logistics. The primary objective of logistics management is to connect the purchasing activity, the production process, the distribution network and the marketplace in such a manner that customers get high quality service thereby, influencing profitability in the long run.