STUDENTS' CORNER - 238
In this session, we will discuss, rather spend some time on the
logistics cost and later its relation to transport.
Almost all business activities that attract expenses can be considered
sources of logistics cost. Say, you are a manufacturer of a product; it means
your business covers the entire range of activities, beginning from procuring
raw materials for your product to the final distribution of the products that
reach the customer. Every activity of the business is cost to the company, as
we normally account it. You begin with
the purchase of the raw materials; then, you convert them into your products.
Necessarily, the products must be transportable; it means they must be put into
a package. Then, you send the packaged products through some intermediate
agents to a warehouse where you store your products; then, from the warehouse,
the products move to the final destination that is your customer through some
retailer.
All these activities demand expenses; and, if you are what is
generally referred to, efficient, then, your expenses are never more than
required under normal circumstances.
Efficiency actually means getting things done faster, better and
cheaper than others without compromise on quality. It implies that every
business activity demands this inevitable efficiency.
You might be aware of the essential Rs about logistics management;
just to recall for the sake of continuity: Right product, Right quantity, Right
condition, Right place, Right time, Right price and the Right customer. Every R makes absolute demand on efficiency.
If one R is defective, it is like a weak link in the chain whose strength
determined based on this weak link. If
all Rs are undertaken with efficiency, rest assured the cost also will be
Right. Business people know very well in
their bones that theory is one thing and practical performance is another
thing.
We will briefly discuss each R from the point of view of the cost from our next session.
