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What is Logistics Analysis?

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  • Written By: Osmand Vitez
  • Edited By: Kristen Osborne
  • Last Modified Date: 02 December 2016
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Logistics analysis is the technical planning a company will go through to manage the flow of goods or information through various business channels. Large firms may have their own set of sub-units that provide supply chain services such as packaging, shipping, warehousing and distributing. Other times, companies can outsource these services to other businesses. Logistics analysis reviews each stage in this process to maximize the opportunity in terms of return on value and economic wealth creation.

Most large companies will employ an individual or set up a small department that manages logistics analysis. Because this business activity requires a certain set of business skills, companies will only hire individuals with the requisite set of abilities for this position. A degree in shipping or supply chain management, along with a background in warehousing, fulfillment or other backroom business operations is often necessary.

To conduct reviews in the logistical analysis process, a company’s management team will often look at each step in the supply chain process and find areas of inefficiency or higher-than-normal operating costs. Because many of the supply chain or logistical functions can be secondary to a company’s main operating environment, costs can quickly escalate since the company may not have the proper facilities to complete logistical tasks at the cheapest possible cost. Therefore, a company must decide whether it can outsource these tasks at an overall cheaper cost, rather than continuing to complete them internally.

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Another purpose of logistics analysis is to find areas where a company currently completes manual tasks, but should install a technological overhaul. Most times, the implementation cost of technology is offset by the lower operating costs in terms of reduced cash expenditures for daily activities. For example, using electronic data interchanges systems will allow a company to order goods quickly through the use of technology rather than relying on employees to constantly monitor inventory and place orders.

The use of logistics analysis also helps a company decide where to locate facilities for the transportation of physical goods. A manufacturer located in one region of a country will most likely prefer to sell its goods nationwide. In order to do so, it may determine that having multiple locations will allow the desired market access. Using logistics analysis, companies can determine which geographic locations provide the best options for moving goods via rail or truck, harvesting natural resources and employing a trained labor force for producing goods and services.

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Mammmood
Post 4

@Charred - You have to remember that the computer is only a tool.

It takes a person - a logistics analyst - to look at a combination of reports and other metrics and make recommendations on how to better streamline company operations.

I believe that the analyst would also have to understand some basic accounting and mathematical principles as well, like statistics, to know how to interpret and summarize data for others to view.

Charred
Post 3

I admit that I am biased towards using computer software to improve productivity, but I think that companies benefit the most when they use computers to resolve logistics problems.

I believe that one of the problems is that of “bottlenecks”. Where in the supply chain process do products get held up so that they don’t reach the buyers on time? Is it packaging, shipping or warehousing?

Is there a surplus of goods in the warehouse or not enough? These kinds of decisions must be made quickly, and I believe that supply chain management software is better suited to answer these questions, especially since things are happening constantly.

MrMoody
Post 2

@hamje32 - Yes, however what Federal Express has started is pretty much mainstream. Other companies have followed suit.

A logistical analysis would not focus on whether those shipping mechanisms are available but how much they would cost, so there would be a lot of comparison shopping involved I think.

hamje32
Post 1

I think that one thing that has made logistics analysis far easier and flexible, at least in terms of some of its components like shipping, is the use of overnight delivery services that rely on transportation hubs for its delivery centers.

I remember years ago watching a documentary on Federal Express and its founder. The guy who started the company came up with the idea in college; it was a thesis or something. His professor read it and completely panned the idea, saying it didn’t stand a chance.

Of course, history turned out differently. The ability to ship packages to central hubs and transport them to different parts of the country overnight has been an incredible success, and has led to efficiency in logistics planning for shipping.

Companies can get goods out faster and to remote locations, and I think, for far less cost than they would have had they used the traditional postal carrier system.

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