Thursday, 7 August 2014

What are the Logistics Effects on Financial Importance?

Logistics is expensive and does impact on the organisation’s financial performance in the following ways:
  • Current Assets – Efficient logistics works to reduce the current assets, mainly be reducing the size of the inventory. This is beneficial as the expenditure on the stock is recued and this frees up money that can be spent on more productive purposes and reduces the need to borrow.
  • Fixed Assets – The warehouses, fleets, facilities and equipment for handling are all fixed assets. Using these assets efficiently will increase the savings for the organisation.
  • Sales – Logistics is able to increase the number of sales and the market share by supplying products to the market that are in demand and improving customer satisfaction through the customer service received.
  • Profit Margin – Using the efficient logistics will reduce the total cost of the operations and as a result the profit margins will increase.
  • Price – Logistics is able to add to the value of the products that are perceived by the consumer. This can be achieved through fast delivery times, shorter lead times and increasing the availability of goods.

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