Business logistics refers to the activity of moving products in a supply chain. It encompasses transporting goods obtained from suppliers and transporting finished goods to consumers, wholesalers, and distributors. Although seemingly unglamorous, it's an essential part of a company's profitability and ability to execute, and it's been one of the hottest topics among investors in the last few years. Here's why and what you need to know.
Business logistics comes to the fore
Investors were reminded of the importance of business logistics by the impact of the COVID-19 pandemic and the lockdown measures imposed by governments. The shutting down of production plants, logistics centers, and transportation companies and the shift in consumer spending patterns created logistical nightmares for many companies.
Transportation costs soared, and product availability declined, creating significant problems for companies trying to catch up with backlogs. As a result, many companies resorted to purchasing inventory at high costs to be able to manufacture products and deliver customer orders. In addition, an overly complex supply chain broke down due to individual pieces not functioning.
Relatively more spending on e-commerce and consumer products associated with "stay at home" measures (consumer electronics, DIY equipment, home appliances, etc.) complicated matters, creating logistical challenges and opportunities.
The future of the industry
The use of technology and increased emphasis on business logistics due to the pandemic means investment in the industry. As a result, companies are looking to reduce supply chain complexity while increasing investment in solutions that aid productivity and reduce waste and spillage, as well as ensuring customers are satisfied.
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