Logistics Profit Center: Cost Savings Isn’t Enough
Supply chain, warehousing and transportation have long been considered cost centers in logistics – necessary services to move the business forward. As support resources, they were accountable to achieving certain metrics that did not necessarily contribute to the top-line growth. Consistent with the industry shifts, that is no longer the case. Logistics professionals are instead finding themselves running profit-centers. Is your department functioning as a revenue-generating business center or continuing to operate as a service center? If it’s the latter or you aren’t quite sure, it’s time to re-evaluate.
Cost center: the way of the past
Running the logistics department as a cost center means you are not directly adding to the profits of the business, but still cost the organization money to operate. While the services you provide are necessary to the organization, you do not directly generate revenue. There is another way.
Profit center: the here and now
Effectively running as a profit center, you’re generating your own results and earnings. You may already be accountable to a revenue or profit metric that contributes to the business.
If you aren’t quite there, you’re not alone. So how do you get a seat at the profit-center table? The key lies in efficiencies, agility, and technology. Utilizing a third-party logistics (3PL) company gives you instant access to the necessary tools – warehouse management system (WMS), skilled workforce, and a transportation network. With heightened demand and shortages amassing, a well-connected partner will offer you the cost-savings that actively contributes to the profitability of the company.
With a proactive approach to logistics challenges and results that positively effect organizational profitability, you’ll be ready to take a seat at the table.