Topic “Investments in logistics”
- In what does your company, and you as a logistics manager, consider it necessary to invest?
– If we talk about the need for investments, then my unequivocal answer is to invest in personnel and training of logistics employees. If we talk about investments in logistics infrastructure, this decision should be consistent with the company’s strategy. No matter how much you would like to invest and develop your warehouse, for example, and the company’s strategic focus is increasing distribution and marketing, investing in warehouse logistics will not be appropriate. And here it is generally more efficient to outsource your warehouse and focus on customer service.
- In which areas of logistics should you invest first?
– The choice of the investment direction is closely related to the strategic activity of the city’s enterprise, and it is clear that investments in logistics cannot be considered separately on their own. But even at the tactical level, there is a need for investments in current infrastructure from time to time. For example, an increase in the number of racks and loading and unloading equipment is associated with an increase in turnover. In this case, such investments are planned and are included in the expenditure budget for the next financial period.
- How to determine the need for investment?
– The direction of investments is determined by analyzing the sales plan for the next reporting period. A simple question: will the existing logistics infrastructure cope with the planned turnover? If not, then investment directions are determined. If so, and there is excess capacity, you can think about subleasing equipment and space.
- What, from the point of view of a successful investment in logistics, can you be proud of?
– The years 2015-2016 were, to put it mildly, not the easiest for the Ukrainian economy, so there was no need to talk about investments, rather the focus was on improving work efficiency. My most successful investment during this period is a comprehensive Supply Chain Management training program that I created for my logistics colleagues and not only, who are looking for ways to improve the logistics of the company they work for and increase their own efficiency.
- How do you calculate the investment payback period?
– Return on investment is the period during which you will return the invested funds. The ratio of the amount of investment to the amount of income in the period. When calculating, it is necessary to take into account equity or loan capital. The shorter the investment return period, the easier it is to justify these investments. If the return on investment in logistics is long, then the business model must include alternative options for outsourcing or leasing. In fact, in a situation of limited funds, it is often more profitable to solve logistics issues with the help of outsourcing.
