June 15, 2017
Distribution logistics is the movement of finished products from the point of purchase to the time it is handed over to the final user. The entire process will include various tasks offered together or in isolation such as; demand forecasting, inventory management, warehousing, logistics communication, material handling, packaging and transportation. Today, more and more FMCG players are opting to incorporate distribution logistics in their processes as outsourcing this arm of business greatly consolidates and cuts down the overall costs of doing business. Winstone Akweyu, Siginon Global Logistics Operations Manager adds, “Key users of distribution logistics include manufacturers, wholesalers, retailers, freight companies, humanitarian organizations and government agencies.”
Siginon Global Logistics, a 32 year old logistics player has invested heavily distribution logistics to meet customer needs for efficiency cargo movement while at the same time managing costs of production of goods which include logistics. The demand for distribution services has been coupled further by challenges in the Kenyan environment which affect cargo delivery such as poor road networks, high cost of cargo security, mis-match in stakeholder systems and processes such as in public (regulator) and private sector standards and continued urbanization due to political conflict and natural disasters. Winstone adds, “Over the years, Siginon has seen a growth in demand in customers that require distribution. We have partnered with customers from both private and public sector in cargo distribution. Cargo that requires distribution logistics is varied. This includes; national examination scripts, relief food to laptops to vaccines as well as FMCG items such as beverages.
The nature of investments required in distribution logistics are capital in nature and would cripple industries whose core business falls outside of logistics. As such, players in the logistics industry have made these investments and offered it as a service and various value addition services in line with the customer’s needs. To satisfy the demand for distribution services, Siginon Global Logistics has made various investments to accommodate the same. These investments include additional warehousing space as well as customized vehicles that are refrigerated. Winstone says, “To ensure preservation of quality in the case of vaccine distribution, Siginon has invested in a refrigerated vehicle fleet that facilitates countrywide delivery of pharmaceutical products such as vaccines. The refrigeration ensures that vaccines are warehoused, transported and delivered in a temperature controlled environment that will maintain the vaccine quality and cool chain from the source to the delivery point.”
Distribution logistics comes with cost advantages for the consumer in terms of freight costs. In Kenya, it is said that freight costs form almost 70% of the cost of goods, however, a distribution partner such as Siginon Global Logistics will provide consumers with various options such as; to consolidate smaller shipments in Less than Container Loads (LCLs) and greatly reduce the freight cost. This includes facilitation of some product processes such as packaging in distribution centres where shipments will require further processes to make them retail ready will reduce freight costs significantly and boost efficiency in cargo movement. This is because 3-party logistics distribution centres facilitate all key packaging processes and ensure that shipments are dispatched retail-ready.
Convenience in distribution logistics has been simplified further with the adoption of technology to enhance logistics efficiency. Technology such as e-tracking systems that are mounted on trucks as they navigate the journey to various delivery points provide a real time report on the location and deliveries made. Smart business models based on joint responsibilities, Internet of Things (IoT) and horizontal business models allow for easy integration between systems of cargo owners and logistics players facilitating prompt reporting as well as real time communication on cargo location and inventory.
Winstone concludes, “Distribution logistics calls for a level of partnership between the logistics provider and the customer. As a logistics provider, you play a critical role in ensuring that your customer’s inventory and costs remain timely and minimal respectively. Distribution moves the logistics burden from the customer to the service provider and allows the customer to focus on their core business.”
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