Let’s Start With What Is Logistics and Its Importance? Ankit Srivastava May 29, 2023


Let’s Start With What Is Logistics and Its Importance?

To simply put Logistics is movement of goods from one place to another. It is divided mainly in two Categories: transportation and warehousing. Logistics is sometimes equal to supply chain management although it’s just a fraction of it, so we can say Logistics is End-to-End Solution for any Product from Raw Material Procurement to Reaching consumer household,

Logistics is a critical component of any business. Goods are produced in one or some selected locations but are sold all over a country as well as in parts of the world, only because of logistics, people can afford the luxury of using products manufactured at a distant location, Say, for Example Leather product manufactured in North India reaches entire country as well as exported to Middle East and Europe.

Even if goods produced are high quality with exceptional marketing and product penetration, it will fail to succeed with badly managed logistics processes. Logistics is one of the key factors for the success of Indian SMEs and their smooth expansion in decades. As we know SMEs are the heart of the Indian economy and logistics is the Blood pumping through veins for small and medium enterprises. Without perfect collaboration this marriage is destined to fail despite a promising start. An eCommerce logistics service provider’s ability to transport goods on time at different locations demonstrates its efficiency. So, why is logistics so important for the success of businesses, especially SMEs?

Why is Logistics an Integral part of SME’S?

In any country, small and medium-sized enterprises (SMEs) function as the pillar of the economy. In India as well, the SME sector contributes significantly to the GDP (Gross Domestic Product) and employs nearly 40% of the workforce. According to estimates, SMEs including micro enterprises (MSMEs) contribute nearly 50% to India’s GDP these small companies build economy brick by brick and become unsung heroes, SME’S and MSME’S account for approximately 40% of exports, and 50% of manufacturing in India.

The presence of SMEs in the Indian economy is a combination of factors like business ideas, production cost, innovative concepts, Labour cost, financial resources, Marketing skills, strategic planning and implementation, customer relationship, and logistics. 

At the centre of any economy lies business entities that don’t have the financial backing of the big tycoons in the corporate sphere, as we know roads are the Heart of Transportation with approximately 65% movement via roads and 30% through rail. .According to a study conducted by IIM-Kolkata, the country suffers a loss of $21.3 billion every year due to delays in transportation and additional fuel consumption due stoppage and Road Conditions.

So we understand Challenges, to overcome Planning and implementation is a key aspect. SME’S do not have leverages like billion dollars conglomerates, Since SMEs work with limited capital and resources, even small errors can impact operational efficiencies and Impact profitability

Besides, ecommerce logistics service providers are not always equipped with the infrastructure to sustain deliveries resourcefully and cost-effectively. They have to deal with increased fuel costs, capital Challenges, increased cost of transportation and laborer’s cost and availability, Targeting Domestic and Global Market markets with these concerns is head on task. Needless to say, a perfect logistics strategy can make a huge difference in operations. So, opting expertise to achieve successful Logistics management is critical. Today logistics companies or we can say partners with Infrastructure and Global presence can offer one stop solution to these companies to hand over strategic advantage with desirable services and cost effective operations.

Logistics Partners with 3PL operations are an added advantage to SMEs and MSMEs the value and expertise they bring to make partnership successful. Apart from its strong network presence, countrywide reach helps Logistics companies to cater customer demands during peak seasons.

Technology-Based Solution

Third party logistics service providers understand the economic changes and rapidly growing demand of technology based solution industry demands, even traditional customers are keen to move from old ways to one stop solution. SME’s understands the changing nature of business and cut throat competition due to costing and services. Not to mention, changing customer demands.  

According to the article More than 50% of Indian Logistics companies are using Real time tracking solution, Integration and automation, real time shipment monitoring from manifestation to delivery. Tech bases solutions have carved the way for business expansion. Digitization and informative solutions has improved forecasting and scaling capacities of SMEs.

Read more: Benefits of Hiring a Logistic Services Company

Customer support, online shipment booking and tracking, Real time reports (MIS), paperless dispatches are cost savings which can’t be ignored Digital documents, automated support processes and online payments in the future.

What Future Holds for SME’S and Logistics?

Indian Government working overtime with the vision of making the Logistics industry a success story by 2030, GST Implementation, Commercial vehicle increased passing are just small examples of what changes we can expect. Infrastructure development is a key target till 2030 which will reduce transportation cost by 15-20%. The introduction of EV and Hydrogen commercial vehicles will become key to the success story. For sure, much more can be done to spin the wheel faster. 

Just like Logistics, SMEs are boosted by the Make in India Initiative of the Indian Government which will contribute to the mission of Vocal for Local. Initiatives, like Industrial Corridor Development Programme, Ease of Doing Business, National Single Window System, PM Gati Shakti National Master Plan (NMP), and National Logistics Policy can be a true support for the 3PL Service Providers for Logistics. 

Read more: PTL vs. FTL: Opt for the Most Suitable Logistics for Your Business

Ankit Srivastava

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