Logic of Logistics



Ever wondered  what is the production cost of any item that we buy?Let it be cool drink,FMCG product or any other.Example normal coke bottle production cost is 3 to 4 rs.But it is sold at a whooping price of rs 12 in retailers place.Now question comes why?Why this much high price. Well the journey of rs4 to rs 12 is supply chain.Coke gets its ingredients from its suppliers and produce the beverage in their plant and then passed into the distributors from distributors it goes into retail store and then quenches the thurst of customer.So in this chain everybody adds  margin and the so high price.Logistics and supply chain involves the process of both inward and outward movement of goods from one place to another place.Logistic management is basically effective integration of right product,right quantity,right place,right time providing right value to the customer.As organizations are trying to be more leaner and giving emphasis on cost reduction logistic and supply chain is seen as a area  where companies can reduce cost and offer better products and services better than competitors.


Thomas Friedman one of great management guru said that “As world becomes flat Logisctics will rule”.This statement is absolutely true and relavent considering the business environment economy is in.Everyone believes that the wave of IT/ITES is almost done and India will experience a new wave of growth specifically manufacturing sector.Manufacturing sector improvement will be directly proportional to the growth of Logistics sector.India spends 13% of its GDP compared to United states 10% which means that there is room for growth and food for thought for logistic industry.



Logistics operations in India so to say is  largely fragmented and un-organized – thereby putting brakes on the growth of retail & manufacturing sector. So its time for private players to step into this sector bring some innovative concept in this sector and also if possible try to copy/imitate the best practices from US,Singapore and other economies.I believe change is around corner with lots of emerging warehouse and logistic hubs in all regions of the country.There is a winds of change in this sector and this will help manufacturing and retail sectors.

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