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The challenges of overcoming the lack of structure for logistics in Brazil

Written by Paulo Nogueira
Published 01/11/2022 às 10:42
André Pompeu, responsible for the development and asset management of Finvest in Minas Gerais,
André Pompeu, responsible for the development and asset management of Finvest in Minas Gerais,

Location, planning, inventory management and technology are some of the crucial points that companies need to be aware of for good cost management and logistical control.

Logistics is one of the major bottlenecks in the Brazilian economy. The country has serious problems with the lack of infrastructure, especially roads, railways and ports. The logistics sector is a strategic area for most companies. In Brazil, logistical costs are high compared to other countries and make producers less competitive in the foreign and domestic markets.

According to the person responsible for the development and management of assets at Finvest in Minas Gerais, André Pompeu, it is not just the precariousness of infrastructure that generates losses. “Logistics goes far beyond that. To reduce these costs, the first step is to know them: inventory, storage and transport, in addition to other costs that are often ignored by managers”, he warns.

Material handling, for example, can be responsible for up to 25% of production costs with inventory costs already included, while packaging costs can represent 30% of the final cost of a product. Therefore, it is essential to adopt strategies and take actions to overcome this challenge, so that productivity and quality in operations are not lost.

Technology has already presented itself as a great ally in the most diverse business processes, being fundamental for increasing productivity, optimizing production and making even more assertive decisions. Within logistics, this is no different, as in addition to minimizing the number of failures, technological solutions can reduce logistical costs by up to 30% depending on their purpose.

Employee training with qualified professionals increases efficiency and makes processes simpler and more productive. With the help of specialized training and courses, the entire team feels more prepared to carry out their duties, reducing the number of errors and possible rework

Inventory is one of the biggest expenses of a company, representing between 20% and 40% of all its costs. One option to eliminate these expenses is Cross-docking, a strategy that optimizes the steps of moving goods and eliminates the need for inventory. This happens because the goods are directly prepared for loading instead of being stored. As a result, companies will have a reduction of up to 25% in costs compared to the use of traditional warehouses.

Another important point is planning, an action that must be started as soon as the plant is built. Thus, managers, along with engineers, must evaluate a layout that facilitates the movement of materials and makes this process increasingly agile. Another solution is to opt for the BTS contract. From English Built to Suit (built to serve), this leasing model regulates how buildings should be made to meet the tenant's wishes, therefore, it follows the specific characteristics of a business.

STRATEGIC LOCATION

Shipping costs may vary depending on the company's location. While long transport represents 50% of logistics costs, the shortest do not exceed 20%. Alongside warehousing and professional planning, location is considered one of the pillars of good logistics, ensuring agility and faster and more efficient transport. Therefore, it is essential to choose to install companies in cities that constantly invest in industrial development and that have optimized logistics so that these expenses can be reduced.

Sete Lagoas, in Minas Gerais, is one of the main cities when it comes to industrial development and reduction of logistics costs. Synonymous with growth, the city has stood out for its industrial production for more than four decades, being one of the main hubs in the country. There are at least three logistical transport options: rail, air and road.

“The state of Minas Gerais has easy access to almost 50% of the entire Brazilian market, which is a great differential for logistics. And nothing better than opting for Sete Lagoas, which has 15 municipalities connected with four connecting loops to the metropolitan region of Belo Horizonte, making this activity even easier”, comments André.

The most prominent property in the region is Eco238. Considered one of the largest industrial areas available for immediate development in Minas, it is located in the North Industrial Zone of Sete Lagoas, where industries consolidated in the market, such as Iveco and Ambev, are located.

The development has approximately 360 m² of land available and ready for the deployment of companies, alongside an ecological park approximately 1 km long. They have complete infrastructure for the installation of undertakings: land with favorable topography (low cost with earthworks), water supply by SAAE, Cemig's electric power system, Gasmig's piped gas system and an easily accessible telephone system.

The region benefits from Minas Gerais' competitive ICMS. In addition, Sete Lagoas recently approved the “Decree of Economic Freedom”, which makes it possible to approve projects in the municipality within 60 days.

  • Source: André Pompeu, Finvest development and asset management in Minas Gerais | Via Communication Interface

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Paulo Nogueira

With a technical background, I worked in the offshore oil and gas market for a few years. Today, my team and I are dedicated to bringing information from the Brazilian energy sector and the world, always with credible and up-to-date sources.

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