Five Pillars of Logistics
There are five pillars one must consider to improve logistics management: speed, accuracy, consistency, low cost, and customer satisfaction. Speed means that how fast the logistic management can process from order processing to goods delivery. This means that fast that the logistic can perform the 5 Rs. Accurate means that the firm performs the 5 Rs without fail. Delivering goods to customers at the right product, place, time, cost, and condition will raise customers’ satisfaction level. In long-term, this satisfaction will lead to customer retention. If less customer defection, firm’s profitability will increase as they said, “retain customers is easily and less costly than finding new customers”. Consistency is important to maintain a long-term relationship with the customers. If a firm can consistently perform the 5 Rs without fail, the customers’ satisfaction will raise. Thus, the relationship between firm and customers prolonged. There are lots of strategies that a manager can use to perform the 5 Rs and keep cost low. But to successfully implement this is a big challenge. The only way is to use advanced technology of computers and software to help managers to point out the best method to perform 5 Rs and the lowest cost possible. If a firm can do that, this will let the firm gain competitive advantage. Last but not least, customer satisfaction. Firm performs the 5 Rs is to achieve the ultimate goal, high customer satisfaction level. Like I have mentioned before, high customer satisfaction can leads to customer retention. Customer retention can lead to increase in firm’s profitability. To achieve high customer satisfaction, firm must combine the 5 Rs with speed and accuracy as well as other concepts to improve logistics. Therefore, it is essential for firms to understand the logistics concepts especially logistics department.
Total Cost Concept
Source: adapted from McKinnon, A. "The Effects of...