LOGISTICS DISTRIBUTION AS A STRATEGIC FACTOR OF SUCCESS FOR MICRO AND SMALL SEGMENT OF FOOD SERVICES
ABSTRACT
The logistics for micro and small enterprises is a key tool for reducing costs in the food sector in addition to this purpose, it also avoids wastage and loss products because they are perishable. With this highly competitive industry, profitability becomes a differentiator between companies that tend to grow and those that close their doors. Adequate logistical planning can significantly lower transportation costs thereby increasing profits, where it comes to smaller companies, it makes much difference. The assessment of priority and distribution on demand is the beginning of the analysis process as a whole, focusing on the regional distribution, delivery schedules, itineraries, plan operational support, predictable and unpredictable adverse situations, human factors and mechanics. The search for better logistical operating system of a company depends not only employees but also the operational capacity to resolve unforeseen problems in a palliative and not desregule or affects the least possible initial planning, constantly revised according to the needs the market segment requires. A strong logistics planning, well-structured and committed to the goals of the company tends to be a very important support tool for the functioning of the whole process, as well as the growth of the same, in order to reduce costs and increase profitability.
Keywords: Logistics Planning, Micro and Small Enterprises, Food Sector, On Demand Distribution, Delivery Schedule.
INTRODUCTION
The sharp rise in the food industry is in evidence in the mainstream media, partly due to mergers between large companies in the industry and partly to highlight that small businesses see winning through differentiation and optimization services.
Through a general analysis, we can say that a modal transport logistics is integrated major factor in the total cost of the product, so avoid losses during the movement of goods and minimize the expenses arising from excessive costs becomes an important point in increasing profitability.
This paper shows that a well structured model of distribution logistics and committed to the policy goals of the organization is essential to the success of these smaller companies. Once they have lower turnover than large institutions and any prejudice, for unless, impairs the financial health of the same.
At first it follows the line of the creation of logistics distribution at the time of the great wars about 350 BC, through the revolution of practical logistics in World War II until the technology used today in more advanced systems.
There are thousands of micro and small enterprises in Brazil today, all classified according to their billing, which can be micro enterprises (ME) or small businesses (EPP), but approximately 71% of them close their doors before reaching five years of existence.
Through a qualitative methodology and data analysis and indicative numbers is possible to analyze how important structure is a practical and functional distribution logistics for micro and small enterprises. Considering that the factor of increased profitability of profitability is paramount to the success and vitality of those companies under the current market.
1. LOGISTICS DISTRIBUTION
1.1. CHRONOLOGY
Since the dawn of history there have been reports of something that resembles the logistics. Alexander the Great in 350 BC was already using an agile method of distribution of food and weapons to his army which once had 35,000 men, but then the conquest and acquisition of slaves made it easier. It was not necessary to seek supplies in the homeland, as if he had won the last place that was much closer and not detach warriors to transport the slaves performed this function.
Followed this example supply until the beginning of the seventeenth century:
” In i Nicio seventeenth century in France, was first introduced in the world, the logistics concept in the war, due to increasing operational problems, thereby creating the rank of General de Logis (from the French verb loger , which means house) . Part of the art of war which deals with planning and organization of accommodation, equipment, troop transport, production, distribution, maintenance and transportation of materiel and other non-combatants relacionad the s[1] . “
The distribution logistics summit was in World War II (1939-1945), was sustainability tool for large armies, making reaching them supplies, provisions, arms, ribs, drugs, etc.. With technological advancement and a need to expand the knowledge of logistics, the military began to civilians of these knowledge and experience, thus initiating a major evolution of the concept of logistics.
In 80 years of globalization and internationalization of trade requires the branches to improve logistics mechanisms creating more functional for sale, transport and delivery of products sold. From the 90’s internet enabled a huge technological leap in this area, forcing managers to improve logistics tools and mechanisms of interaction with the customer, sale, storage, shipping, transport and delivery in the shortest possible time and cost.
1.2. TRANSPORT
Logistics today is responsible for managing resources, supplies, handling, storage, transportation and technology advances there are now focused on the areas of logistics information technology.
Transport, as seen earlier, was the beginning of logistics operations and is still regarded by many as one of the most important vectors of the branch. The high cost of the materials handling and product needs, this function has a significant share in the company’s logistics costs. So no need to distribute what is produced at reduced costs by avoiding unnecessary losses and expenses, helping to make the company competitive. It is focused on the transit of goods. A company can choose how to work the transport of its products. Some opt for storage in distribution centers, where the product is transported from the factory there and after the sale is directed to the customer. Others focus on goods in transit, ie, after selling the product comes direct from the factory to the customer.
” The transportation norm ally represents the most important element in terms of logistics costs for many companies. The cargo handling takes from one to two thirds of total logistics costs. Therefore, the logistics operator needs to be a connoisseur of the transport issue. “(BALLOU 2005, p.149)
Regardless of the policy storage, sale or storage, transportation of goods and products is an important part of organizational logistics. A plan without error or excess of resources makes transportation faster, quicker and less costly for the company.
1.3. DISTRIBUTION
The logistic distribution depends on many variables that can be prioritized by the company according to your industry or market segment that acts ward.
The priority demand, regional distribution, delivery schedule itineraries, historical frequency of claims, demands and seasonal peaks are promotional variables to be studied in distribution planning.
A well-structured respects the most important variables is flexible and adverse conditions. The strategy is to set up a schedule for transportation that works with all possible variables and adapt to situations more quickly, thus avoiding overspending and thus waste of resources that reduce the profit margin.
” The shipping cheap also contributes to the reduction of prices and products. This happens not only due to the increasing market competition, but also by virtue of being the transport of the components – along with production, sales and distribution – that make up the total aggregate cost of production . As transport increases in efficiency and will offer an increasingly better performance, the society is benefited by improving their standard of living. “ (BALLOU 2005, p.150)
As such, the transport in addition to being distribution tool supplies and goods, is also a key part in improving the living standards of society, reducing production costs and the final price of the product, thereby increasing the purchasing power of people, there view that a lower cost allows individuals to buy better goods and better quality, also contributed to the improvement of your lifestyle, health and wellness. There are as cause and effect of this permission from the company to use the advantages that using an appropriate distribution in their internal politics. Work to improve its logistics performance is also working to improve the living standards of people, this reflects very positively on the image that the organization raisins to their customers and employees.
2. MICRO AND SMALL ENTERPRISES
2.1. WHAT ARE MICRO AND SMALL ENTERPRISES
In Brazil, small businesses fall into two categories: micro enterprises (nominal termination ME) and small businesses (nominal termination EPP). This classification is given regarding the annual gross revenue.
Micro enterprises fall within a band whose annual gross income ceiling is R $ 433,755.14 (four hundred thirty-three thousand seven hundred and fifty five dollars and fourteen cents). Have small businesses, small businesses commonly called, are between R $ 433,755.14 (four hundred thirty-three thousand seven hundred and fifty five dollars and fourteen cents) and R $ 2,133,222.00 (two million one hundred thirty and three thousand, two hundred twenty six dollars). These values ??were updated on 1 April 2004, by decree law signed by President Luiz Inacio Lula da Silva, 9841 ratifying the Law of the status of microenterprise and small business.[2]
The representation of small and micro enterprises at the national level is very significant, representing 98% of companies active in the country, approximately 80% of the workforce and account for about 42% of wages generated in Brazil. [3]
Even with all this power and representation in the national economy, about 71% of them close their doors before completing five years of activity, the early mortality of small businesses due to several factors: lack of training of entrepreneurs and managers, difficulties in obtaining access to credit and technology, pledging tax and excessive bureaucracy. By occupying a position of significant economic importance and prominence, this segment needs a match to their needs and to facilitate the exercise of their activities.[4]
2.2. ADVANTAGES OF A PROPER DISTRIBUTION LOGISTICS
As micro and small enterprises live in a hostile environment of extreme competition, any factor poorly managed can contribute to the failure of the same. I try to the importance that the logistic distribution has on operating costs, an integrated planning for the transport of products and goods contributes greatly to reducing costs, increasing profitability and maintaining the company’s financial health.
Clearly proportional to the reduction of costs by the transportation system, the yield increases due to the savings generated by efficiency of this system.
2.3. FACTORS AFFECTING THE DISTRIBUTION OF PLANNING
Every plan, however sketchy it may be, is prone to interference from internal and external, as well as factors that may deregulate it. It is the team that makes the logistical planning of the transport company to study and implement schemes or definitive palliative strategic out of these adverse situations.
About certain circumstances the human factor is what most interferes with this tactical seeping production companies. In smaller companies, whose staff employee is leaner, there is usually no spare staff who are there only to cover other missing, then an unscheduled absence in the group of drivers, for example, confuses a lot and gets to prevent some deliveries are performed.
The mechanical factor is also another variable that bothers operators of the transport system. However, this can happen at any time or place. Affecting the fleet at the beginning or end of the day or even in the middle of the route of delivery. Especially in small companies, demand and revenues do not justify a fleet outsourcing to perform deliveries and even reserve a vehicle and not having that, in most cases, the only option is to rent a car to meet the needs in the period repair.
The logistics operator that takes care of the transportation system of the company’s main focus at critical moments, to create outputs that address mitigation as soon as possible the problem created by these factors that affect the distribution. The sooner the problem is corrected the less the damage, leaving the cost of observing these operations resulted, which were objective and inexpensive.
3. THE IMPORTANCE OF LOGISTICS DISTRIBUTION IN THE FOOD BUSINESS
The food industry is divided into various types and kinds of services, which comprise a large range of clients, but here is exemplified only two, and transport of frozen meals for immediate consumption.
Companies transporting frozen while they were semi-ready for consumption (eg lasagna Perdigao) or ready to use these in larger packages, containing only one type of product to be handled and served. (Example: package frozen potato pre-cooked and ready to fry). The transport of such goods requires refrigerated cars and a leaner script and direct, so the vehicle is going to fixed points avoiding loss of time because there are cooling even under adverse conditions of temperature and climate that may influence the quality of the merchandise.
The products for immediate consumption are more sensitive and require a more refined plan. A company that serves meals takeaway type, packaging needs hot box, own meals and for allocation of a specific vehicle to transport the same routes and fixed schedules and routes pre-programmed. The path has to be monitored to avoid delays in delivery and the goods or the need to stay on the road for too long.
The transportation is the most vulnerable of all the logistical planning, as there are extrinsic factors that can make getting out of control the operation of the logistics operator. Even with the adverse factors and taking into account taxes and the focus should remain the quality and preservation of food during the drive.
The logistic distribution is an extremely important role in food industry, for transporting perishable food is very delicate and demanded attention to several factors. Perishable foods are sensitive to biological deterioration, physics and chemistry, harming its qualities for consumption if not properly stored, transported and delivered.
Having all this in mind the proper distribution logistics and prepared to deal with aversive aims not only to ensure the integrity and quality of food, but also minimize the transportation costs, which in turn increases the profitability of the operation. The profit that can generate the transport is due to the expense that it did not generate or even the economy of resources for effective planning.
CONCLUSION
The objective of this study was to evaluate the use of modal transportation distribution logistics as a strategic factor for increased profitability in smaller companies.
All issues raised focused view models, theoretical and practical, which are indispensable for micro and small business use of their potential for implementing a model of logistic transportation and distribution agile to be a determining factor in the differentiation of its services, boosting profits and making it competitive marketing scenario.
Being a transportation element that takes up two thirds of total logistics costs and that small businesses have a budget considered very sensitive to losses, is of paramount importance that the logistics provider knows the variables that can help or hinder the operation of moving goods. This shows that an adequate logistics distribution and focused on the profitability of the company, becomes a factor for generating profits and decrease costs.
All distribution planning is prone to failure and vulnerable to external factors that can compromise the entire process, so that the company that best suit the needs and know the best way to manage internal and external activities that interfere with the progress of the planning will be a highlighted that will add value to your product and increase profitability.
Therefore, this article points to an important question of how important a well-defined strategy for the movement of goods from food companies. Since an adequate logistic distribution reduces losses of perishable goods, a sector which directly commits any overspending the budget.
However, among micro and small enterprises, which soon see the importance of logistics planning and proper allocation, this will have a differential that can take it much stronger growth than the others. And who can not absorb this need, most likely, will be among the thousands who close their doors every year.
REFERENCES
BALLOU, Ronald H. Supply chain management: logistics business. St. Paul, ed. BOOKMAN, 2005.
SANTOS, Josival Novaes. In 2007. Evolution Logistics in Brazil . Available at: http://www.administradores.com.br/informe-se/artigos/evolucao-logistica-no-brasil/13574/>
Favilla, Clara. In 2004. Limit Increase Sales of Micro and Small Enterprises. Sebrae News Agency. Available at:
SEBRAE / MG. In 2006. Public Policy: Concepts and practices. Available at: http://www.sebrae.com.br/exibeBia?id=2829>
BEDE, Marcus Aurelius and Azzoni, Carlos Alberto. Coordinators. Survival and mortality of the firms in Sao Paulo from 1 to 5 years. Pg.03. Sao Paulo. SEBRAE / SP, 2001
[1] SANTOS, Josival Novaes. In 2007. Evolution Logistics in Brazil . Available at: <http://www.administradores.com.br/informe-se/artigos/evolucao-logistica-no-brasil/13574/>. Accessed on 16/04/2010.
[2] Favilla, Clara. In 2004. Limit Increase Sales of Micro and Small Enterprises. Sebrae News Agency. Available at: Accessed on 17/04/2010.
[3] SEBRAE / MG. In 2006. Public Policy: Concepts and practices. Available at: <http://www.sebrae.com.br/exibeBia?id=2829>. Accessed on 17/04/2010.
[4] BEDE, Marcus Aurelius and Azzoni, Carlos Alberto. Coordinators. Survival and mortality of firms in Sao Paulo for the first five years. Pg.03. Sao Paulo. SEBRAE / SP, 2001.