Entrepreneurship generally requires three things: bravery to take the plunge and start the company, intelligence to run the business, and capital.
For most would be business-owners, especially in a developing country such as this, what may be limited is capital.
Logistics industry hopefuls are likely to be intimidated by the bigger, more visible names in the industry, neglecting a useful and developing segment of the market: small scale businesses.
Like any other company, small scale firms, logistics industry or not, are in need of efficient supply chain management.
Well executed supply chain management helps reduce costs associated with service or product delivery.
Some processes along the supply chain add value to the final product, incurring a necessary cost along the way.
This is understandable from a business stand point: to make money, you must spend money. Some processes, however, rack up production costs without adding any value to the product.
With proper supply chain management, such financial black holes can be identified and dealt with accordingly by eliminating them, thus lowering overall company costs and serving to widen the profit margin.
For a small scale logistics firm, such costs can include utilizing far more travel packaging than necessary on cargo.
In the same vein, efficient supply chain management in small businesses can help identify areas of wastage.
Where resources are being improperly used or assigned to functions that do not add value to the company, other sectors of the company in need of similar resources suffer.
Well trained supply chain managers can take steps to plug these resource leaks, thereby reducing production costs for the company and again, lowering costs.
An example would be where Human Resources are employed to redundant packaging procedures: unnecessary processes can be dismantled, with precious few personnel being transferred to a department more in need of their services.
A useful side effect of the increased efficiency likely to be brought about by the two measures above is increased output of the company.
Where systems are running at full power, with excess fat trimmed to avoid weighing down operations, productivity is likely to experience a surge forward.
With much needed resources being re-distributed to the department where they are most needed, provision of services will now be properly supported by the necessary infrastructures, resulting in increased quality and quantity of delivery.
Small scale logistics companies can especially notice the difference made e.g. where employees tethered to redundant functions can be transferred to help with loading delivery vehicles, cutting the time used to do this down and allowing more prompt delivery schedules.
Proper supply chain management within small companies also involves ensuring the right logistics systems and tools have been utilized or implemented to the benefit of running the company.
This includes systems used for inventory management, such as updating records and automatically ordering refills of goods running out of stock.
The advent of such systems can also save the small scale firm precious time and resources, including staff that would have been tasked with dealing with said issues.
The same basic principle applies to dealing with contractors and external suppliers: often, companies can come to great savings by diversifying their supplier base, ensuring they have received the best rates the market has to offer, unencumbered by “loyalty” to one supplier.
While all these principles apply across the board to most logistics firms, regardless of niche, they are of import to small scale firms the most.
Running on limited capital and resources, small scale business owners must find ways to lower costs enough to push profit margins as far as possible, which the supply chain management is more than glad to provide guidance on, between friends. What do you plan to implement in your small scale business?