What are the objectives of Logistics for a firm?-LM Blog-05

Logistics is the first condition for determining the purpose of doing any task in a planned and smooth manner. The reason for this is that the purpose is set, the guidelines become clear and successful execution of the work becomes easy.

The strategy to be followed in the field of logistics also depends on what is the attainable objective. Therefore, it is very important for any firm to clarify the main purpose of the logistics system. There may be different objectives of logistics for different firms, but some of the main objectives, let’s know them here:

1. Improving Customer Service-

The ultimate goal of logistics is to maximize profit in the long run by providing maximum satisfaction to the consumer. Thus, the major objective of all logistics efforts, including logistics, is to improve consumer service. This increase both sales and profits.

Efficient management of logistics helps improve the level of consumer service through economical and effective arrangement of storage, transportation and stock.

Increasing the level of consumer services directly affects the cost to logistics. Therefore, it is necessary for logistics to make a thorough analysis of the needs of consumers and the policies of competitors when making decisions regarding the level of service.

2. Reduce Distribution Costs

Reduce Distribution Costs – Another goal that is often a matter of discussion is to reduce the distribution cost of products. The cost incurred on logistics includes expenditure on transportation, storage, maintenance of stock, etc. and the cost reduction on one of these results in increased expenditure on other items.

Therefore, the objective of any firm is to reduce the total cost of distribution, for this, only after properly analyzing the total cost on the alternative system, should choose the system with minimum total logistics cost.

Distribution costs also relate to the level of service provided by a firm it happens. If a firm is determined to provide a lot of service to consumers, then it is natural that the cost of logistics will also be high.

3. Generating Additional Sale

Generating Additional Sale – Another goal of the marketing logistics system is to increase sales of the firm’s products. The firm can attract consumers by improving its distribution system and providing better service at lower prices.

For example, by decentralizing the storage system or using less expensive and more efficient means of transport, a firm can reach more and more parts of the market. At the same time, it can retain its loyal customers by preventing the occurrence of conditions such as goods not arriving on time or not available.

4. Creating Time and Place Utilities-

Creating Time and Place Utilities- Another goal of the marketing logistics system is to create time-based and spatial utility in products.

If the products are not transported from the product center to the place where there is demand, then there is no use for the consumers. Similarly, it is also necessary to make them available at the time of consumption.

Both these tasks are done through the logistics system. For example, it is beneficial to keep products in warehouses from their plurality to the time of their depletion in order to achieve more local and seasonal utility. For this, the warehouse should be in such a place from where they can be delivered to the consumers at the time of need. Also, the goods stocked in the warehouse should be in sufficient quantity, so that the needs of consumers can be met in times of crisis.

5. Price Stabilization

Price Stabilization – The objective of marketing logistics is to help maintain the prices of goods at a certain level. It is used wisely using available transport mediums and storage facilities by maintaining regular supply of essential commodities in the market.

For example, the textile industry, which needs agricultural raw materials. The supply of this material fluctuates. With regard to the supply of raw materials, if market forces are allowed to function uninterruptedly, the situation is that during the harvest season it becomes very cheap and it is very expensive after the end of this season. it happens.

But during the harvest season, fluctuations can be stabilized by keeping raw materials in the warehouse and providing them in a short time. Thus prices can be stabilized with the help of physical distribution functions.

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