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.
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.