Logistics in a small business

Whether you’re crafting necklaces at home to sell online or overseeing the operations of a busy restaurant, logistics affect you. In fact, every business is affected by logistics to some extent.

What is logistics?

Logistics is the management and control of the flow of goods and services from the source of production to the customer. Even service businesses rely on logistics to receive their supplies.

How can small businesses manage logistics?

Small businesses that rely on foreign manufacture of their goods must determine the best, most efficient way of getting those goods home to North America. Investigate your options for shipping and handling. Talk to large, global logistics providers LIKE UPS Supply Chains Solutions, which uses its own aircraft to handle shipping of product.

No matter what size your small business is, make sure you understand your logistics – so much of your business can depend on its smooth operation. Get to know all the variables of getting your product from Point A to Point B. You don’t have to be an expert, but get a working understanding of things such as cost, suppliers, industry trends, market demand, even certain rules and regulations that might affect your logistics.

For more on operations management, check out a recent blog post about all the moving parts of operations management in a small business.

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What is an operations process?

You may have heard the phrase “operations process” in relation to small business ownership before, but what is it exactly?

Basically, operations processes transform inputs to outputs. Inputs are things like raw materials, labour, equipment, information, and money. Outputs are products or services, as well as the level of customer satisfaction people have after they’ve purchased from you. Operations processes are different for retail, manufacturing, and service businesses – but the underlying idea is the same for all businesses, big and small.

Want to see it in action? Let’s use a flower shop as an example. Lauren, the shop’s owner, has to transform cut flowers, ribbons, wire vases, florist time, knowledge, and other resources into a deliverable flower arrangement. This arrangement must be packaged with a card delivered to the right person at the right time, and make the customer happy. All of this is Lauren’s operations process in action.

Here’s a closer look at the different components of Lauren’s operations process. She must:

  • Purchase the right flowers from the right suppliers (purchasing);
  • Have those flowers delivered at the right time in perfect condition to the shop (materials management);
  • Make sure to have a trained florist on hand to assist customers (knowledge, labour and production);
  • Create the floral arrangements in such a way that they are consistently high quality and works of art (quality control); and
  • Ensure each and every customer is thrilled (customer satisfaction).

As you can see, an operations process is linear. The inputs go through a transformation stage and become outputs.

Every business undergoes some version of this process. Some companies are better at it than others, which becomes a competitive advantage for those small companies that learn to do this well. Each component of your operations process must be managed, measured for efficiency, and tested for effectiveness.

Next week we’ll talk about how the operations process differs between services businesses and product businesses. See you then!

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What is operations management?

When we talk about operations management in a small business, we’re talking about a lot of moving parts. So what is operations management? It refers to all the activities, processes and controls a small business uses to produce its products and services. The components of operations management include:

  • New product or service development
  • Inventory management
  • Purchasing
  • Manufacturing
  • Distribution
  • Logistics
Tips for creating an operations management plan for your small business

Whether your small business is in retail sales, manufacturing or a service company – or anything in between – you need an operations management plan. Of course, the operations plan for a hair salon won’t be quite the same as that of a small manufacturing business, but a plan is vital. How will you source your suppliers? How will your inventory get to your location? Who will control purchasing? Is it the same person who will control distribution? The list goes on! The components of operations management are interlinked, so a well-crafted operations management plan will ensure you are prepared.

Sounds complicated, but there’s a silver lining – entrepreneurs and small start-ups can design and implement new and innovative operations processes without having to overcome outdated ways of doing things. Older, larger businesses are always looking for ways to cut costs and improve operations. Small firms are fast and flexible, and can quickly gain the upper hand over the competition if they can deliver more efficiently too.

Have more questions about operations management? See what questions have already been answered in our Ask an Expert – Operations Management section. If you don’t see your question there – ask! We love talking operations management with fellow entrepreneurs.

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