Logistics really doesn’t have to be difficult. At root, it’s just the process of moving objects from one location to another. It’s not rocket science. But businesses can get in a real spin about it, worrying endlessly about the complexity of their operations and supplier relationships.
Why does this happen?
Logistics Seems More Complicated Than It Actually Is
Part of it comes down to the fact that many logistics companies make it seem more complicated than it is. To outsiders, how goods move around the country feels like a type of incomprehensible alchemy. The network is so vast and complicated, you wonder how it can possibly function.
But when you delve a little deeper into the inner workings, you soon see that it’s a bit like maths. Complicated concepts build on very simple foundations. At the fundamental level, it’s all very basic indeed.
We Don’t Know About Existing Solutions
Businesses tend to believe that if they want certain services ad hoc, they have to purchase them on retainer.
Legal firms set up these kinds of arrangements all the time. If colleagues require their services, they simply call them up and use them. However, this tactic winds up being expensive because you’re often paying for services you’re not using.
The same happens in logistics. Firms pay companies a subscription and then wind up having more capacity than they need.
New options, like Shiply, eliminate this issue by connecting people to trucking firms on a job-by-job basis. But they’re not yet a mainstream business tactic.
We Don’t Understand Logistics Principles
Logistics tends to break down into five key elements that all need to be able to work together to allow you to deliver value to customers.
- Information and control systems to let you see where your shipments are, how many orders you need to fill, and estimated times for delivery
- Inventory, showing you what you already have in your warehouses
- Transport, meaning that trucks that take goods from one location to another
- Packaging and unitisation, which helps keep products safe and separate different orders
- Storage, materials handling and warehousing, are now a major part of eCommerce business models.
The purpose of storing and handling products in warehouses is to allow the supply chain to operate at peak efficiency. Imagine if production lines had to stop every so often because of changes in consumer demand. It would cost a fortune, and prices would go up massively.
Packaging is also critical because it makes it easier to transport goods. Without unitisation, it would be hard to load and unload goods onto trailers, making the whole process much more labour intensive.
Transport is critical for moving goods around the supply chain and getting them from producers to their target markets. Transport options include freight vehicles, trains, and even people’s cars.
The problem is that a lot of companies don’t understand these principles. And that’s what gets them into trouble. They think they have adequate control systems, even when they don’t. And they can’t keep up with which orders they’ve filled, and which they haven’t.