Benefits gained by organizations from logistic service providers

By Priya Chetty on April 20, 2012

Benefits gained by organizations from logistic service providersThere are several benefits that organizations could gain on availing the services offered by a logistic service provider. Deepen (2007, p 21) has identified that the major benefit of logistics is the reduction of costs that it offers to organizations. The logistic service providers are more efficient than a manufacturer.

The appropriate utilization of resources by them results in lesser production cost for the organization. Another major benefit that could be gained by an organization in availing the services of a logistics service provider is that the increase in flexibility (Salvendy, 2001). They help the organizations in becoming more responsive as the requirements of the customers or market alters, since logistic service providers offer organization with a knowhow of available resources.

Lesser costs of production is also gained through scale economies and scope resulting from huge volumes of equal or similar logistics services which the logistic service providers generate and through higher utilization ratio of the properties employed. Furthermore logistics service providers can balance distinct demand patterns better than an individual manufacturing organization by diversifying the portfolios of customers and lowering down labor costs.

Another benefit of logistics is that it impacts the cost position of an organization directly due to reduced requirement for capital investments. It helps organizations save costly expenditures on information technology. Besides logistics outsourcing also helps in the decrease of unnecessary investments in workforce which proves valuable specifically in countries with tightly regulated and inflexible labor markets.

Thus logistic service providers help organizations in managing their supply chain at an affordable cost.

References

  • Deepan J M (2007), Logistics outsourcing relationships: measurements, antecedents, and effects of logistics outsourcing performance, Physica Verlag, Germany, p 21-22.
  • Salvendy G (2001), Handbook of industrial engineering: technology and operations management, John Wiley & Sons, USA, p 264-265

Priya is the co-founder and Managing Partner of Project Guru, a research and analytics firm based in Gurgaon. She is responsible for the human resource planning and operations functions. Her expertise in analytics has been used in a number of service-based industries like education and financial services.

Her foundational educational is from St. Xaviers High School (Mumbai). She also holds MBA degree in Marketing and Finance from the Indian Institute of Planning and Management, Delhi (2008).

Some of the notable projects she has worked on include:

  • Using systems thinking to improve sustainability in operations: A study carried out in Malaysia in partnership with Universiti Kuala Lumpur.
  • Assessing customer satisfaction with in-house doctors of Jiva Ayurveda (a project executed for the company)
  • Predicting the potential impact of green hydrogen microgirds (A project executed for the Government of South Africa)

She is a key contributor to the in-house research platform Knowledge Tank.

She currently holds over 300 citations from her contributions to the platform.

She has also been a guest speaker at various institutes such as JIMS (Delhi), BPIT (Delhi), and SVU (Tirupati).

 

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