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Understanding Business II

Management and Finance


2019/2020 edition

Task: to propose a problem definition based on a chapter content

Lev Pavlyshyn

Essay on Chapter: no.15


Problem: to reduce logistic costs

Transporting products is a usual operation for many businesses for which they spend a large
amount of money. My 2 core elements of solving this problem are warehouse and
automation.

If you are shipping goods from point A to point B, especially over a long distance, you can
store products closer to your customers and thus significantly reduce transport costs. In
addition, it also affects the safety of products, therefore, reduces the risk during their
transportation.

To reduce logistics costs, automation is key. Regulating, automating and optimizing manual
processes can reduce labor cost, centralize production operations and create a more
proactive approach to customer satisfaction.

Logistic costs are influenced by many factors and to reduce them you need to consider every
part in supply chain; even lowering part of the cost in each link, as a result, it will save a
significant amount.

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