Why New Realities in Logistics Need New Thinking?

Disruptions in the last year and the challenging events that followed, be it natural or man-made have had a major impact on businesses across global markets. These affected all functions including logistics. As a result, businesses need to reassess the macro picture affecting the supply chain resiliency, inventory management, warehousing, and the mindset of the teams involved.

All assumptions regarding the performance of global supply chains need to be reviewed including the assumption of cheaper and reliable freight modes, freight rates, duties and surcharges, etc. All factors now need to be dealt with and factored for uncertainties and flux.

Ongoing disruptions might not ease for the remaining part of the year. Management will rely on the supply chain teams to deliver the goods, as always. The logistics teams had proven their mettle during the pandemic to ensure essential goods were delivered to markets.

The contribution of warehousing in the supply chain

Warehousing is not a high-priority consideration in the supply chain course, but it’s fairly important. An optimized warehouse can make the entire production and distribution strategy more efficient and convenient for business. As costs of doing business continue to rise, warehousing is a critical area of focus to mitigate such expenses. Warehouses are overworked today caused by a rapid increase in demand following the pandemic. Online orders peaked beyond expectations across the year and businesses were affected by the increased costs of goods and services.

This has left warehouses at every point especially in the e-commerce pipeline trying to find ways to reduce their operational costs, both to help the bottom line and to avoid passing the expenses onto their customer base. And while most of these efforts have been further up the logistical chain, a lot of internal processes can be reviewed to minimize overheads while helping warehouses run more effectively.

Channelizing micro-fulfillment

Businesses need to be innovative with their supply chain solutions. The sudden blitz in online e-commerce may not end very soon. Firms need to find newer ways for their logistics to keep pace. Apart from the overall order volume increase, delivery times are expected to be crashed. Can businesses look at micro-fulfillment to get their orders executed faster?

Micro-fulfillment combines the speed of last-mile delivery with the regionally-focused convenience of in-store order pickup. This could be applicable to a number of industries. With micro-fulfillment, goods are aligned with small, regional distribution centers for the final delivery of their order. These centers receive their stocks from the main warehouses and perform all tasks needed to complete the delivery from packing to delivery. Grocery retail and mass fashion brands can use this format apart from other segments. The key difference between main warehouses and micro-fulfillment warehouses is the focus. Micro-fulfillment is expected to rise and will be able to provide services and holding that businesses need to stay competitive.

 Exploring co-warehousing as a cost reducer

Co-warehousing has grown of late as several businesses get together to share one big warehouse to reduce and share inventory management costs. Firms can employ co-warehousing for inventory management and also as a solution for last-mile deliveries.

Online commerce portals use a lot of co-warehousing. They need to maintain adequate levels of stock items across size and weight. Flexible wire shelving, rivet shelving, and pallet racking are typically offered by a majority of co-warehouses.

 The need for zero disruption

Labor scarcity, disruption in supply lines, fluctuating consumer demand, and loading terminal issues have created nightmares for the supply teams. HR teams have battled to keep front-line staff safe from the virus. With such enormous challenges at hand, how do supply chain teams stay focused and ensure zero disruption? The answers lead to digital transformation as a long-term solution. What trends will the industry be expected to follow?

Digitization through Transportation Management Solutions

Such software solutions can plan freight movements, compute freight rates, choice of route, and carriers as we as billing and payments. This enables businesses to automate processes from bids and tendering as well as booking. Data with respect to freight movements and operational planning are also covered. operations in the most efficient and cost-effective manner.

These tools offer data for informed decision-making as well as achieve higher efficiencies. Most tools can be configured and integrated within prevailing ERP solutions. These solutions lower freight costs, dependence on manual staff, and associated errors. Most importantly, one has access to dashboards to devise future strategies and evaluate current process efficiency in real-time.

The relevance and impact of real-time information

IoT-based devices such as GPS and RFIDs help businesses garner visibility on the movement of freight. This enables teams to be on top of the situation. This leads to improved customer service and a more accurate prediction of delivery times.

The usage of cloud computing and zero-trust access

A number of SaaS-based logistics service providers offer cloud computing solutions. As businesses become leaner and agile, technology can ensure that teams use their core assets from anywhere and with greater efficiency.

Collaboration of partners to share and optimize fleets and delivery networks is an example that leads to reduced freight costs or minimization of cancellations.

Managing the ‘last mile delivery’ component

Last year, the World Economic Forum predicts about 60% of the global populace will reside in cities. This year, the World Bank predicted that nearly 70% will reside in cities by 2050. Rising e-commerce trends and increased urbanization will impact the logistics industry, especially in the last-mile delivery segment. This will segment will significantly add to overall logistics costs. Perishable items like food, groceries, and medicine will be impacted to a large extent.

Food delivery apps have effectively managed the on-demand meal delivery business by successfully balancing cost-effectiveness with speed and delivery time. Other industries will need to follow suit especially while dealing with large orders.

Such trends are being gradually incorporated in the logistics industry as the pandemic accelerated the felt need. The supply chain process can be safeguarded from damage, theft, data mismanagement, and other risks. Hidden and ad hoc costs can also be minimized.

Allied Digital while traditionally a service provider now also focuses on smart city solutions, master integrator services, ITSM solutions, and cloud migration as a service offering.

The author Sunil Bhatt is Chief Technology Officer at Allied Digital Services.


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