by Logistics is not just concerned with material or information transitions but it support marketing function, product development, price promotion and helps in bringing new ideas to provide customer service. It ensure that firm should provide fast, accurate and quality service.
Logistical competency leads to increased revenue, create opportunity for major cost savings in operations and simplify complexity of distribution network. Logistics competency includes the ability to analyze and design new distribution networks and optimize existing networks.
It also include management of information required of order processing and demand forecasting. It encompasses managing of all logistical performances in such a manner that it results into optimization.
Thus, summing up, it could be said that Logistical competency is the assessment of a firm’s capability to provide competitive services to the customers at the lowest possible cost.
3 Cs Model of Logistical Competency:
3 Cs model of Logistical competency suggests that the three Cs in Logistics i.e. Company, Customer and Competitor, all are quite important for the growth and survival of business and economy at large. The 3 Cs model of Logistical competency generates competitive advantage for the firm. The 3 Cs are discussed herewith:
There exists a 3 way relationship between three parties as represented in the above diagram. Customer is one who shows the desire to buy the products. He always search for products with best quality and low price. Company works hard for selling their products so as to satisfy these desires of customers. It utilizes all its assets in the optimum way and always see to it that customers are influenced to buy their products only. Competitor is one that tries to fascinate an magnetize the customer. He also utilizes all his assets in the best possible way and tries to influence the customer.
There exists a 3 way relationship between three parties as represented in the above diagram.
- Customer is one who shows the desire to buy the products. He always search for products with best quality and low price.
- Company works hard for selling their products so as to satisfy these desires of customers. It utilizes all its assets in the optimum way and always see to it that customers are influenced to buy their products only.
- Competitor is one that tries to fascinate an magnetize the customer. He also utilizes all his assets in the best possible way and tries to influence the customer.
Thus Company has to strive very hard in order to retain the customers. They do so by providing cost advantage to the customers and value advantage to the customer. Competitors also tries to bring down their cost and provide value advantage to the customers. Company and competitors strive for cost differentials.
And that’s how in the whole process, wherein company and competitors, both are trying to provide value advantage to the customers by becoming efficient, the logistical competency is achieved.
Parameters to achieve Logistical Competency:
Logistical Competency can be achieved with the help of certain parameters. These parameters stand like five pillars in completing the logistics mission of the company. These parameters are as described as follows:
(a) 1st- Network Design: A manufacturer may have multiple facilities of plant, warehouses and distribution centres. Network design aims at forming a structure so as to perform logistical activities efficiently and effectively. The manufacturing units and warehouses may be located in various geographical areas, far from each other. In the same way distribution centres will be disperse across different areas. Network design tries to establish connectivity among all these facilities for better performance of logistics operations and more importantly to provide better customer services resulting in customer satisfaction.
(b) 2nd– Information Management: Information Management is essential component here. It is required for demand forecasting and order processing. Logistical performance depends a lot upon how the information is received, shared among the different facilities in the network and ultimately used to make the customer delivery according to the order placed by him. Contemporary technology is used in logistics for the same. Softwares like ERP, CRM, and technologies like EDI, ePOS, etc. are widely used for information management.
(c) 3rd- Transportation: Transportation is required for the movement of goods from one party to another. Transportation accounts for 60 to 70% of the logistics costs. Logistical function of transportation deals with decision like choosing right mode of transport, deciding to have one’s own feet or to outsource, deciding on the total cost, transportation infrastructure, reliability of mode and so on.
(d) 4th Inventory Management: In order to control total cost it is quiet significant to control and manage the inventory. Inventory management is concerned with maintaining the requisite levels of inventory in such a way that there is neither understocking nor overstocking. Sufficient levels of stock are to be maintained to satisfy the customers’ requirements.
(e) 5th- Warehousing, Material Handling and Packaging: Logistics is also concerned with maintaining the storage area wherein heaps of goods are stored till they are demanded by customers. Such logistical function is called as warehousing. Logistical function of warehousing deals with the decision size, number, layout, location and nature of warehousing.
Material handling is an art and science of moving, packaging and storing of substances in a form. It includes lifting and shifting of materials in order to save space, cost and time. The overall productivity of logistics is improved with automation and mechanisation of material handling system.
On other hand, incorrect methods and system of material handling results in high costs. Packaging is required for efficient handling and storage of goods. It is also essential for protection of goods from any loss or damage, specially during transit. Packaging adds to the shelf life of any product and makes it durable for longer time. Packaging, which is quiet attractive, make the goods easily saleable in the market. Packaging is also very much necessary for providing convenience and ease of handling to the end users.
Thus Logistical competency can be enhanced by right logistics mix and proper network design.
