Logistics companies have always thrived in a country as big as Australia, as goods need to be shipped in and transported thousands of kilometers to reach their end customer. But while the industry itself is old and established, it is experiencing a huge shake-up as current consumer trends change.
Customers Expectations Are Shaking Up The Logistics Business
While their parents and grandparents would happily drive to a store to buy whatever they need, generation Z and millennials prefer shopping online and expecting their goods delivered to their doorstep. Beyond that, many of them are now demanding same-day or next-day deliveries, as well as after-hours delivery and deliveries on the weekends. These services have been generally non-existent in the past.
By next year, generation Z and the millennial cohorts will comprise more than half of the world’s workforce and up to 40% of its consumers. This means their shopping preferences will shape how retail and logistics companies do business from this point on. Unfortunately, they will also factor in delivery time customer satisfaction when choosing where to buy, to a point that they will go to a competitor if they end up receiving their goods within their timeline expectations.
These changes will, without a doubt, bring in many challenges to retail companies but all the more to logistics companies like 3PL Service in Melbourne who are the main players in the movement and delivery of goods from the manufacturer to the end consumer.
Challenges Facing Small Logistics Companies
Meeting customer expectations is one of the biggest driving forces of a logistics company. However, it has to be balanced with efficiency and being cost-effective. This is also partly because the consumer of today wants their delivery to be fast but also cheap. Thus, it is perfectly normal to see players in the logistics industry to be encountering the following challenges:
Cutting Transportation Costs
The cost of distribution and transportation can be affected by many factors but the biggest of these is the cost of fuel. When the cost of diesel goes up, so do the costs for shipping companies. This means they have to make the most of every trip, which can affect the efficiency of deliveries.
Lack Of Manpower
Beyond the rising costs of transportation, there is also a huge demand for drivers who will move the goods from one point to another. The job is not only difficult and lonely, being out on the road, but it is also not a very attractive career for many.
Government Regulations And Environmental Issues
Many societies are implementing green initiatives and the truth is, the logistics industry is under a lot of pressure to fall in line. These are then translated into laws and regulations that these businesses have to comply with, which directly impact their practices and bottom line.
Business Process Improvement
As the number of individual deliveries increases, there is a need to be much more efficient in all of the logistics processes. While there are many improvements and new software out there that will help, the adoption and implementation of these can be tough and time-consuming.
At the end of the day, customer satisfaction is a huge factor in how the business succeeds or fails. All logistics companies, big or small, need to balance cost-effective operations with meeting customer expectations.
How Small Logistics Companies Overcome These Hurdles
A smaller company is much more vulnerable to the hurdles that affect the business. This means they have to adopt the right strategies to keep up with the bigger logistics companies and stay competitive.
Overcoming Transportation Challenges
Small logistics companies might not have excess transport trucks when they need them. They might also have challenges with scheduling and routing of the trucks they do have. First of all, they can maximize their transport trucks by being efficient in packing so that more products can be fit in one journey.
However, there are some times when there are too many orders or when the delivery of goods cannot be done efficiently and in a cost-effective way. These limited resources can be overcome by making the right partnerships. Small logistics companies might need to form strategic alliances with companies that will support in the forwarding, shipping, payment, consolidation, local tendering, contract services, and brokering. By outsourcing some of these services, they can meet their orders while minimizing transportation costs.
Beyond getting partners, they can also adopt new technologies that help small logistics companies in effective goods transportation. This includes automated material handling devices, systems to track vehicles online, global positioning systems, delivery and payment confirmation systems.
Planning Is Key
Businesses in the logistics industry know that proper planning is of vital importance. In order to succeed, you need to manage transportation, time, and costs. This ensures that there can be more deliveries done in the shortest amount of time. This will ensure that profits can be maximized.
Still, there can be unforeseen circumstances that can throw off planning. It can be an issue with transport trucks or other organizational problems. In these situations, contingency plans should be in place to cover these circumstances.
Small logistics companies can compete with the bigger players by adopting the right technology. This can contribute to planning and achieve maximum efficiency. These technologies can reduce the need for manpower and the paperwork traditionally required in this business. For example, billing and proof of delivery can be done using software that also allows for easier tracking. Business owners can find out how the status of distribution and transportation without leaving the office.
By making sure these processes are automated, the work of manually entering this information is no longer necessary. This makes auditing easier and faster, and business owners can focus on more important tasks.
Changes In Distribution
Current trends have truly changed how logistics companies operate. Warehouses are no longer storing huge stocks of products that need to be transported to retailers. Instead, there are individual boxes or products that are to be shipped directly to the end consumer.
Automation has also been key in making distribution more efficient and cost-effective. Small logistics companies will not have as much warehouse space or manpower but with the right technologies, they can make up for this. First of all, adopting robots instead of hiring more employees makes more sense because humans are not as efficient and are prone to making mistakes. The second advantage is the fact that robots can work around-the-clock without having to pay overtime for employees.
Lastly, warehouse management can be improved so that perishable goods are distributed and delivered before they go over their best-before date. This minimizes the wastages of valuable goods. It starts with the right sequencing of products so that the older products are first picked up. Adopting the right software is also key.
Any small company struggles to compete with bigger companies, especially when there are hurdles that need to be overcome. When it comes to logistics companies, consumer trends are making it more difficult to operate efficiently and profitably. In order to deal with these challenges and succeed, small logistics companies need to follow these tips and improvements.