Businesses know that the process of building and delivering a product is multi-faceted and full of challenges. Part of running a successful business is understanding the logistics issues that affect your operations.
But if you’re not well-versed in the world of logistics, it can sound very complicated. After all, you probably didn’t start a company because you were excited about supply chain disruption, labor shortages, and demand variability. But once you understand logistics challenges, you’ll be able to find solutions.
In this article, we’ll explain what logistics issues are and some of the most common challenges that businesses run into. Then we’ll discuss solutions that help you overcome and minimize logistics issues.
What are logistics issues?
Logistics are the operations involved in getting your product into customers’ hands. This can include everything from sourcing materials and storing inventory to packing orders and shipping to customers. Many elements of logistics are related to order fulfillment, so you’ll often see the term “fulfillment operations” in logistics discussions. Logistics issues are the challenges and problems that come up at different stages of the logistics process.
One of the factors that sets logistics apart from other business functions is that it often involves collaborating with or relying on external vendors, suppliers, and partners. You need to purchase raw materials from a supplier, you usually work with a shipping company to deliver orders, and many businesses use third-party logistics companies for services like warehousing, picking products, and packing orders.
All these external organizations (and the economic and market forces that affect them) can pose problems or introduce complications. If any stage of the supply chain breaks down, it causes logistics issues for your business. And logistics issues affect both the customer experience (speed of delivery, quality of product, etc.), but also your bottom line. Logistics issues eat up time and money and have a big impact on how profitable a retailer is.
While logistics may not be top of mind when you start a store, it can make or break a business.
Top 5 logistics issues
Logistics issues come in many shapes and sizes. With so many moving parts, there’s always a variable that can affect efficiency or availability. Many of these logistics issues have overlapping causes and contributing factors, but we can identify some of the most common categories they fall into.
Supply chain challenges
The supply chain is the network of businesses and people that are involved in getting the product into your customers’ hands. It’s a journey that begins with sourcing the raw materials (whatever they may be) and ends with the customer accessing the finished product.
You can picture the supply chain as a workflow or assembly line, where the product or order has to complete one stage before progressing to the next. If the raw materials haven’t been shipped yet, you can’t manufacture the product. It’s easy to see why the supply chain is a huge source of logistics issues.
The COVID-19 pandemic and the Suez Canal obstruction in 2021 both had a big impact on the supply chain, leading to delays, increased prices, and massive disruption to businesses of all kinds.
These historic supply chain issues have made supply chain management a rapidly growing industry. More companies are investing in both technology and talent to navigate these challenges. The supply chain management market was worth $15.85 billion in 2020, but is projected to nearly double by 2026.
Transportation and shipping
Transportation affects your operations at multiple stages. Raw materials have to be transported for manufacture or assembly. Finished products have to be transported to a warehouse and storage. Orders need to be transported to their destination. The international transportation management market is expected to reach $11.4 billion by 2027.
Weather, traffic, and even geopolitical events can affect shipping and transportation. Vessel and container shortages can add to the delays. Relying on a single type of transport or shipping can lead to a lot of problems. If something goes wrong with that vendor, you can face big delays and costs.
Challenges with shipping and transportation have led some retailers to adopt transportation management systems, which can control and track the movement of goods. Delivery Solutions not only gives you unprecedented visibility into your logistics operations, but also provides an intuitive post-purchase interface for your customers to track their orders.
For local businesses or very large businesses — like Amazon — it may make sense to have your own transportation methods. But this comes with the challenges of fleet management, such as vehicle maintenance, route optimization, and driver training and management.
The last mile of delivery is notorious for being the most expensive and labor-intensive step in order fulfillment. To avoid these challenges, many businesses now encourage customers to buy online and pick up in-store or use curbside delivery.
Manual or obsolete tracking
Tracking is another logistics concern that can affect both your business throughout the fulfillment process. Tracking may begin with tracking raw materials, but you also have to track inventory to know when to produce or order more.
Then there’s order delivery tracking, which concerns both the business and the customer. Nine in 10 online shoppers track their orders and 19% of the customers surveyed said they checked their order tracking multiple times per day.
Since almost all retailers have to rely on shipping and delivery partners, you have to work with those partners to provide accurate order tracking. But giving customers a tracking number that they can plug into the UPS website simply won’t cut it. Apps like Uber and Doordash have trained consumers to expect an incredible level of visibility, with real-time vehicle tracking and frequently updated delivery time estimates.
To meet modern customers’ expectations, retailers need Delivery Solutions unified omnichannel technology, which uses tracking information directly from your final mile carrier to give customers up-to-the-minute updates on a tracking page or through emails or text messages.
Labor shortages
Like materials and transportation, the scarcity of labor (both skilled and unskilled) affects both the availability of your products and costs to both you and your customers. It takes hundreds of people to get your product to your customers.
The COVID-19 pandemic and its effects have led to a shortage of workers as the economy rebounds, particularly in the transport and logistics industry. According to the American Trucking Association, the United States had 80,000 fewer truck drivers than needed. Maritime shipping has also struggled to retain and recruit enough talent. COVID has also increased e-commerce shopping and the prevalence of home delivery, meaning these industries struggle with vacancies and have been trying to manage increased demand.
When labor is in short supply, it can lead to delays, but the scarcity also increases the cost of labor. Since every stage of the fulfillment process requires some type of labor, it’s easy to see how the costs of labor shortages can add up.
Demand variability
Demand variability, where consumer demand for a product or material changes over time, is a factor in many businesses. The simplest examples are seasonal products. Baseball equipment, for instance, peaks in demand in the early Spring. A retailer’s logistical needs for such a product can be very different from one month to the next.
Christmas trees are another good example — consumers only buy them within a few weeks of the holiday. This means that retailers that sell Christmas trees are often all competing for the same supply of trees at once. This obviously has a huge effect on the scarcity of the trees themselves, but the effects go even further.
For a seasonal product, businesses need to consider not just the demand for materials or products but also the demand for shipping, logistical services, and labor. If a trucking company devotes most of their services to the seasonal product, that leaves fewer resources for other industries that might contract the trucking company. The same principle applies to raw materials. Skyrocketing demand in another market can make it extremely expensive, or even impossible, to replenish your inventory.
Forward-thinking retailers and supply chain managers need to consider external industries that can tie up resources and affect their bottom line.
How do you handle logistics issues?
There are a nearly endless number of logistics issues, but there are comprehensive solutions that can help you prevent and solve them.
Third-party logistics
Part of what makes logistics so challenging is that it’s hard for many businesses to efficiently handle inventory, picking and packing orders, and process returns. third-party logistics (3PL) allows retailers to outsource tasks like these to partners that specialize in them.
3PL partners can help retailers receive and store their products. If, for example, you have an e-commerce business but don’t have a warehouse, you can partner with a third-party logistics company to receive bulk shipments and store your inventory. This allows even very small businesses to carry larger stock and fulfill more orders.
(Order fulfillment is another process that 3PL service providers can help with. While they store your inventory, a 3PL company can also pick and pack orders and prepare them for delivery. Many e-commerce businesses also use third-party logistics partners for returns and even customer service. The breadth of services they provide, as well as access to exclusive shipping rates, are why third-party logistics has grown to a $347 billion industry in the United States.
Digital transformation
Logistics is often seen as a very practical industry, concerned with moving real objects from place to place. But as consumer expectations and the supply chain have evolved, logistics has become an increasingly data-driven and technologically modern domain. Retailers need to manage customer data, keep up-to-date inventories, track orders, and process revenue through different payment types and currencies. Digital transformation is the only way to keep up.
An integrated technology stack can make all your logistics run smoother, making sure that you have an accurate picture of your supply chain, inventory, market, and operations. And since customer communications and payment processing are so important to modern e-commerce, your technologies need to integrate and work together.
Delivery Solutions offers the world’s only omnichannel experience management system, connecting you with shipping and delivery partners and enabling a best-in-class customer experience.
Flexibility
From sourcing materials to last-mile delivery, logistics issues can show up at any stage of the process and with any partner or vendor. When you depend on just one solution, a single challenge can derail your entire business. Flexibility and a variety of partners, tools, and vendors allow you to better respond when an issue shows up somewhere in the supply chain.
Along with its innovative experience management technology, Delivery Solutions customers gain access to dozens of shopping, delivery, and logistics partners. So if one solution isn’t working, you always have other options. Full visibility into your fulfillment operations also allows you to identify logistics issues faster and act before costs get out of control.
Delivery Solutions for logistics issues
Logistics issues are an inevitable part of business. Part of what makes them so challenging is that they are often out of your control. But you can control how you prepare and how you respond to them.
Whether you’re wrestling with tracking issues or supply chain challenges, having a strong technological foundation that keeps your records up to date is a smart move. The right partners can also allow you to navigate and overcome challenges. What both technology and partners can do is give you flexibility and options to respond as issues arise.
Schedule a demo to learn how Delivery Solutions gives you the technical foundation and the access to partners that allow you to solve logistics problems.