How to become a master of business logistics

Logistics may not be the most exciting aspect of running a small business – but getting it right is crucial to success
The UK has always been a nation of inventors. According to the latest figures from the Intellectual Property Office, last year saw the number of patents granted remaining almost static, with just a 1% drop. These successful inventors must now bring those ideas to market. A large part of that challenge will be developing and maintaining an efficient logistical system within their businesses.
For a new product to come to market, a number of processes have to be in place. Raw materials and manufacturing facilities have to be arranged and then shipping the finished goods to the consumer has to be considered. For smaller enterprises, it is vital to get managing the logistics in their businesses right if they are to remain profitable over the long term. Getting the logistics within a business wrong can have dire consequences.
James White Drinks presses and bottles fruit and vegetable juices which are marketed under the James White, Beet It and Big Tom brands. Logistics is a critical component of its operations.
"Our factory is located in Suffolk, which is within a reasonable distance of our main beetroot and apple growers," says managing director Lawrence Mallinson. "The challenge of logistics on the sales side is about scale. It is expensive to ship in small quantities. But the real secret of logistics is to recognise that different challenges require different solutions. We employ someone full-time to determine which of many different options are used for each challenge.”
Starting outFor many small businesses the journey to market can be a rollercoaster ride. From sourcing raw materials, through endless prototyping and then manufacturing and distribution, it's critical to ensure that the logistical processes that each of these steps requires is handled efficiently.
Jimmy Cregan, founder and managing director of Jimmy's Iced Coffee, says: "We got on the phone to every coffee supplier and demerara sugar supplier in the land and asked for samples. We held focus groups with friends and family and got them to try our various samples. A good pal of ours designed the logo. We followed our gut instinct all the way until we had a Jimmy's Iced Coffee carton full of the good stuff in our hands.”
Manufacturing is a major component of the logistical process, with China remaining a cost-effective base for many companies. Kate Castle, founder of BoginaBag (now Gear to Go) explains: "The logistics involved in sourcing were the largest challenge I faced when setting up the business. Sourcing from China without a budget to travel meant that communicating my requirements was difficult.”
She adds: "Rather than prototyping within the UK and then getting a Chinese factory to replicate the product, I got my Chinese factory to produce a sample from images. This is much cheaper than UK prototyping but does mean you can hit problems with variations on the types and quality of materials used.”
Mark Thompson, managing director of the AceOn Group, a Birmingham-based company specialising in bespoke solar and battery products, outlined his approach: "Developing a relationship is key to having the stability to take the product forward and you need to understand how the marketplace works within China, as it is very different to UK suppliers.
"You need key people so that there is one focal point in the beginning so everyone is clear of the expectations from both sides. You also need good clear communications at all times, and although this can produce a trail of emails, it is worth the investment so all parties are very clear on deposits, quality and expectations. Challenges will need to be made and overcome to get to this point.”
Supply-chain managementDesigning the ideal logistical process for any business will take time and resources. This is, however, money well spent as the logistical component of a business can be the hub around which all other aspects orbit. Mallinson explains: "You need to be flexible and supply your product in the quantity and the time that your customer expects. This is why you need to use multiple logistical solutions.”
Cregan says: "The more logistical arms you add to the equation, the more mouths have to be fed. It's all about margins and if you're not careful they can move around like the wind.”
What is clear is that the logistical operations of a small business can't be overlooked. If this aspect of a company is right, the manufacture, supply and price of product will ensure it is competitive in its market sector.”
He adds: "Meet every single person in your logistic chain. You will always get an extra mile out of someone if you have met them. Always, always pick up the phone when dealing with any queries. Emails can be misinterpreted and you don't have time to waste in logistics. It is a very fast moving beast and it needs nurturing, loving, time and attention.”
Castle has seen her company expand since her successful pitch on Dragons' Den. She advises: "Keep an eye on every aspect of your logistics costs and make sure you have built these into your product margins. As you grow, your business should be willing to make changes to the way it does things. By doing this you will be able to ensure that your logistics continue to work for you as you grow the business.”
Logistics may not be the most exciting aspect of running a small business, but it is the foundation that all other processes are based upon. Becoming a master of the logistical processes in your business is a skill that you must develop and continue to hone as your company develops and expands.

Source: http://www.theguardian.com/small-business-network/2013/oct/14/master-business-logistics

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