Naturally, we are not the first ones facing the question of defining
what business logistics consists in. There are many definitions explaining this
term, that was initially related with the military issues. To get an idea, we
would like to start showing two of these definitions.
One of these definitions is the one proposed by the Business Dictionary,
that describes Business Logistics as the “coordination of projected
requirement, procurement, physical movement, and storage of components, parts,
raw materials, and semi-finished and finished goods, to achieve optimum
demand-service level at minimal cost. It includes both inbound and outbound
movements, and is a larger concept than distribution management which does not include
activities such as forecasting and procurement.”
Another shorter definition speaks of “having the right item in the right
quantity at the right time at the right place for the right price in the right
condition to the right customer".
These definitions are excellent, but probably is still quite difficult to
clearly understand what business logistics represents in reality, so that is
what we are aimed to do in this post.
Our view is that business logistics is as a crucial department in any firm,
as it should be connected with all the other departments in order to analyse
and plan the best way of organizing the company and its activities. It’s not
only about goods, transportation and warehouses, it also has to do with, among
others, purchases, customer service, or marketing. Taking all of this into
consideration, every logistics decision can have consequences in different
areas, so, in order to make sure the company will achieve its goals, these
decisions must be carefully analysed before being taken.
Therefore, effective logistical systems usually contribute to the
achievements of the firm as well as to its marketing objectives, maximizing
customer satisfaction with, for example, excellent product quality, quick
deliveries, a cost reduction or an excellent customer attention.
We hope this has made a little bit clearer the definition of business
logistics but, even so, usually the best way to completely comprehend is to see
it in practice. In this case, we would like to explain the case of Decathlon, a
firm with a successful logistics system.
The case of Decathlon:
Decathlon, founded in 1976 in France, is the largest sporting goods
retailer in the world, with stores in 49 different countries around the world.
Its production is always subcontracted but centralized by geographical zones.
Its logistics department is one of the most important inside the company and
it’s not externalized.
The key of the good logistics of the company is on its articles section.
Decathlon has its regional warehouses acting as logistic centres for the
stores. The most important part is that these warehouses only have the products
called as 20/80, the 20% of the articles that represent the 80% of the
sales. Mainly, this corresponds to footwear and textiles products.
Other products, like bicycles or the horse riding ones, aren’t stored in
these warehouses, and the strategy of the brand in this case is to keep in
stock only the cheapest ranges. If any of the more expensive ones is demanded,
then it has to be asked directly to the factory to manufacture it. Also,
Decathlon decided to build a continental warehouse in Paris to stock the low
rotation products. With all this logistics strategy, Decathlon sells big
quantities of its cheapest products and avoids stock accumulation, leading to a
cost reduction.
Another important point is the fact that the orders from the different
selling points are made automatically, based on the stores’ stock and on the
maximum and minimum stock levels previously determined.
Logistic hub
in Sant Esteve Sesrovires
Besides that, Decathlon has different logistics hubs to receive the goods
from the suppliers and to deliver them to the corresponding stores. Its main
objective is to help the subcontractors to reduce their delivery time and also
to implement the groupage transport of the burden to the warehouses, also
reducing costs.
One of these logistics hubs is the one inaugurated last year in Sant Esteve
Sesrovires (Barcelona), in a central location, near the port and the airport.
With approximately 40.000m2, this centre supplies all the 40 shops around
Catalonia, Valencian community and Balearic Islands, and has also allowed the
company to increase the number of operations made as well as their efficiency.
Having analysed all these factors, we think Decathlon is a clear example of
the huge importance of the logistics in a company. In this case, with some
changes in the way to organize the reception and delivery of the goods, the
location of warehouses or in how to operate with stock, Decathlon has achieved
great benefits, and the Spanish market has become the second most important
market for the firm, only behind France.
Alba Martínez Barrero
Anna Colomer Comellas
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