The Changing Role Of Logistics: From Ugly Duckling To Strategic Partner In Organizations

Bruno Mendes is a seasoned professional with solid experience in managing supply chain strategies, national logistics, transportation, foreign tradeand port operations, with a career being built with major national and international brands in the food, beverage, cosmetics and metal industries.

Through this article, Mendesemphasizes the evolving role of logistics from a mere operational function to a strategic asset crucial for business success. He highlights how efficient logistics management can reduce customer service costs, improve distribution strategies, leverage tax advantages and ultimately enhance customer satisfaction. Mendes advocates for integrating logistics deeply into business strategy to achieve competitive advantage in today's complex marketplace.

I remember 22 years ago when I decided to embark on an adventure in the world of logistics, which until then had been unknown to me. I have to confess that although it was a bit strange for my parents since my sister had chosen medicine in a more prime area, it was love at first sight and I am still highly energized by the dynamism of this area and I am happy to see how Logistics has increasingly become a great strategic partner in the delivery of huge projects, bringing profitability, improving processes and influencing the company throughout the order cycle, from internal factory logistics to the delivery of products to customers.

Throughout my career, I have worked for large national and international companies, from fully operational positions to strategic positions with global reporting. In fact, I can attest to the fact that the logistics area is making great progress in its quest to become more than just a supporting player and is increasingly becoming an essential strategic partner in the delivery of great results.  The global market is increasingly evolving, driven by technology and the growing demand for efficiency, requiring companies to review their operations and recognize the importance of logistics as a pillar of support for business growth.

I imagine that in the middle of 2024, it's no longer news to anyone that historically, logistics was seen as an operational function focused mainly on moving and storing products. However, this perception has changed dramatically for many companies seeking efficiency. Today, logistics is recognized as a vital element for competitive advantage, playing a decisive role in customer satisfaction, operational efficiency and cost reduction. The organization that hasn't noticed this is losing a lot of money.

Here, I want to share key points on how logistics and transport can help reduce the cost of serving the customer, improve the distribution strategy, generate tax gains and provide other significant benefits for organizations.

"Logistics should be seen not just as a support function but as a key strategic pillar for delivering exceptional results. The companies that recognize and embrace this change are those that will be best placed to thrive in an increasingly competitive and dynamic business" environment

Reducing the Cost of Serving Customers

With efficient logistics management, there is no doubt that there will be a positive impact on reducing the cost of serving the customer. This gain comes through optimized strategies, focusing on reducing operating expenses and improving profitability. But it's very important to be vigilant because cost reduction that reduces the service level is not a gain; it's bad management.  Here are some methods that I consider important for improving the cost of serving the customer.

1. Route optimization and monitoring: It's hard to get good results using Excel alone. Using advanced software to optimize transport routes can minimize fuel consumption and reduce delivery times, resulting in substantial savings. Faced with the current complexity of deliveries in large cities and the increasing need for predictable deliveries, the use of technological tools as a basis for achieving results is crucial. The use of real-time tracking systems allows customers to keep track of their orders, increasing trust and satisfaction.

2. Cargo consolidation: I see the process of cargo consolidation as extremely positive for reducing transportation costs. But here, I want to talk about loading consolidation from the perspective of external collaboration with other companies, which can often use the same vehicle for shared deliveries to the same common customer. The search for collaborative logistics is a step beyond the mere consolidation of cargo; it is a strategic look at sustainability.

3. Efficient warehousing: Strategically locating distribution centers can reduce transportation costs and improve response times. Proximity to target markets allows for faster and less expensive deliveries. Today, the competitive difference is not only in the quality of the product but also in how quickly we can meet customer demand.

Tax gains through logistics operations.

Logistics definitely has the capacity to provide significant tax benefits. The perfect choice of locations for distribution centers can significantly reduce the operation's tax burden. In addition, a good understanding of local and international tax regulations allows companies to take advantage of tax incentives and customs regimes favorable to the operation. I worked as head of supply at a Korean food and cosmetics company at the beginning of its establishment in Brazil and my biggest challenge was, together with the tax and fiscal management team, to design the best logistics network, opening distribution centers in regions that would provide tax gains.  Defining the best logistics model—importing, storing and distributing was crucial to the company's success and growth.

Some points that can help in this design for operational gains via the implementation of logistics engineering are as follows:

1. Free Trade Zones: Using free trade zones or export processing zones can result in exemptions from import, export and other taxes, improving profitability.

2. Regional Tax Incentives: Some regions offer tax incentives to attract business. Locating logistics operations in these areas can result in significant long-term savings.

3. Tax Planning:  Integrating logistics with the tax planning team allows companies to optimize their tax structure, avoiding unnecessary taxation and taking advantage of all available tax benefits.

Boosting Customer Satisfaction

There's no avoiding this rule—customer satisfaction is directly correlated to the company's logistical efficiency. Fast, accurate and reliable deliveries are essential to maintaining customer loyalty and guaranteeing the repurchase of products or services. In my analyses and decision-making, I take into account a number of points that I believe are important for this to happen, such as transparency and traceability—an efficient reverse logistics operation, personalization and flexibility and an operational support base structured around technology and innovation.

I keep arguing daily that logistics should be seen not just as a support function but as a key strategic pillar for delivering exceptional results.  The companies that recognize and embrace this change are those that will be best placed to thrive in an increasingly competitive and dynamic business environment.

Let's continue building Logistics together that provides financial gains and brings customer satisfaction.