Logistics as a profit center

The logistics association PLAN’s recent roundtable on the topic “Logistics as a profit center” turned out to be of such great interest that the venue had to be changed. This perhaps confirms the trends discussed. The speaker, David Gonzales of Garner, stated that before 2018, 20% of companies will view their logistics organizations as profit centers, with the purpose of serving both internal and external customers.

Primelog has worked with organizations that have transformed their internal logistics departments into profit centers for many years. With excitement, we look forward to more companies moving in this direction. We believe this can be regarded as a natural development towards total logistics control, including both physical and financial flows.

We have identified four steps towards control:

1. Lack of control – You are vaguely in control of your logistics. You are aware of the level of transports and warehousing costs, but you do not have easy access to the details needed to analyze and improve the flow.
2. Reactive control – To move from lack of control to reactive control. This primarily involves taking control of two flows: the physical flow and the financial flow.
3. Proactive control – This step is all about moving from reactive control to becoming more proactive, and managing your flows actively. Here, we also manage the physical and the financial flows.
4. Business control – It is now time to take your logistics to the next level and ensure that the logistics system you offer your customers is competitive and a decisive factor in the choice of you as their supplier.

When you have reached the fourth step, you are ready to make a business out of your logistics. It should be competitive in the logistics market. This would prove that you have the measure of control required to be a logistics expert. As a bonus, you will be certain that your company’s own logistics needs are met and carried out in the most efficient way; with a high level of customer service, total visibility and maximum cost effectiveness. If you are able to compete with commercial logistics players, then you can rest assured that your company is getting as much value for money as possible for the logistics budget.

Read more about the four steps to total control

Magnus Molin
R & D Director
magnus.molin@primelog.com