Logistics as a tool to improve the company’s competitiveness

The increasing role of logistics in the modern period, which occurs in the context of the increase in industrial production and expansion of national and global economic relations, requires special attention to its potential with respect to cost reduction in market activity and improving the performance of farming.
Logistics development primarily motivated by the desire to reduce the time and monetary costs associated with the movement of goods. At the same time, a sharp increase in interest in the logistics of the following factors:
In Western countries, 93% of the time the movement of goods from the primary source of raw materials to the final consumer accounts for its passage through various channels logistics. The actual production of goods takes only 2% of the total time, and transportation – 5%. In these countries, the share of proceeds from the movement of goods is more than 20% of national income. In the structure of the cost of movement of goods, the cost of raw materials, semi-finished and finished products is 44%, the cost of warehousing and dispatch costs – 16%, the main and technological transport – 23% and 9%. 8% of the remaining attributed to costs of the sale of finished products.
Development and sharpening competition in Ukraine takes place under conditions of development of business and private property and to a large extent is influenced by the integration of national economies into the world trading system. In this situation, the use of Ukrainian enterprises the old traditional methods of management functions of supply, production and distribution, will not be able to provide a significant competitive advantage. That is why more and more domestic enterprises to implement its own management system elements of logistics.
Logistics advantages in the competition is based on research by British scientists, who argue that the cost structure of production is about 70% of the costs that are associated with the storage, transport and packaging. From this comes up, it is in the field of logistics, not production, as previously thought, contains the largest reserves for the improvement of the competitive position of the company.
Among the major components of the economic effect of the use of logistics in the production and circulation of the most weighty are:
– Decrease in inventories all the way flow of material;
– Reducing the transit time of goods on the supply chain;
– Reduction of transportation costs;
– Reduction of manual labor and, consequently, the cost of cargo operations.
Benefits from reducing inventories due to the fact that the structure of the cost of the inventory (pay the rent, energy costs, administrative costs, salaries, corruption, embezzlement, and the like) make up more than 50%; most of working capital goods (10 to 50%) – this illiquid stocks. Reduced inventory by using logistics allows concerted action by all of the logistics process to reduce production costs, improve working capital, as well as to use the released funds for other purposes.
Reducing the time of passage of goods in the supply chain also has significant economic reserves. The bottom line is that the structure of the total time on the production and sale of goods (from the formation of the order for materials and ending with the final consumer), the manufacturing process takes an average of 2 to 5%. Thus over 95% of the time is spent on turnover logistics operations. Reduction of this component will increase working capital, and thus get more profit per unit time.
The effect of optimizing transport routes Timetables transport, which reduce idle running of vehicles, also leads to a decrease in production costs.
And the use of the same operations, the same container, similar methods of cargo handling, at all levels of the supply chain form another component of competitive advantages in terms of logistics applications – reducing manual labor and related costs for cargo operations.
Logistic approach also creates prerequisites for the improvement and other indicators of the company, which is to improve the overall organization of the enterprise, establishing reliable relationships that suggests an increased level of control and making higher financial and economic indicators. In general, logistics affects almost every aspect of the financial results of enterprises.
Thus, logistics as a special kind of management activity focuses its efforts on the research and optimization of processes involving the movement of material and information flows. At the same time, due to the action of its special tools, there is a growth of key performance indicators of enterprises.