How Effective Logistics and Transportation Management Leads to Scalability in Business Operations
We continue our ongoing "Strategic Shipper" series, with our 8th post in the series. We feel that if more shippers took a strategic look at shipping versus a tactical one, they will reduce costs, improve customer satisfaction, and remain competitive. As an easy way to catch up on the series, you will find the below posts on effective and strategic logistics and transportation management:
- 10 Ways Effective Transportation Management Drives Competitive Advantage
- 6 Strategic and Proactive Tips to Stay Ahead of Distressed Shipments
- Strategic Logistics: 8 Steps to Controlling Inventory Flow & Driving Warehouse Efficiency
- 5 Areas of Technology Application to Aid in Logistics Visibility and Communication for en Route Disruptions
- 6 Benefits of Applying Useable Data in Logistics For Continuous Improvement
- Strategic Logistics Management: The Importance of Flexibility
- Why A Successful Transportation Management Program Is Empowered By Data
Today's post is going to focus on how a confident logistics and transportation management practice allows for a company to have the ability to scale and grow without the worry of their logistics and transportation not keeping up with new markets or increased demand. This confidence allows for company stakeholders and employees to do their best job and remain innovative and strategic in all facets of the business.
Logistics and Transportation Mangement Confidence Begets Innovation and Scale in Business Operations
Regardless of current size, growing a business remains one of the primary goals of any company. However, businesses often forget about the role of effective logistics and transportation management for improving day-to-day business operations. Ultimately, having the right system in place is the defining factor between a stale growth rate and expanding current business size. Take a look at how effective logistics and transportation management systems lead to scalability in business operations.
Scalability to Take on More Orders
When a business’s existing system reaches capacity, the ability to enter more orders and generate a profit become hindered. The capacity of a current system is comparable to a speed limit for business. If the business operates at maximum efficiency for the current system, the total amount of revenue will never exceed this threshold. However, increasing the efficiency within a system enables more orders to be fulfilled and open up space for additional orders. Unfortunately, many current systems rely on inherently inefficient processes and do not take advantage of advanced management tools to improve overall effectivity.
Automated Transport of Items Within a Warehouse
An efficient transportation management system integrated into an ERP or WMS considers all possible variables within a warehouse. These variables may include current stock amounts, distance to travel from storage slot to pallet, and amount of time to load the merchandise. As a result, each of these processes should account for the most efficient processes in the warehouse.
For example, items from slot A should be located near similar items, which may be ordered by the end-user concurrently, to reduce the amount of time needed to move items from slot to loading zone. Therefore, the amount of time spent picking the items is reduced.
An effective management system must take these aspects into account during sortation. Fortunately, these events are cataloged automatically to ensure merchandise moves the least amount of times within the warehouse, which reduces length of time in preparing a shipment and helps workers adhere to dock schedules.
Flexible Shipping Processes and Scalability
Today’s customers have been given access to an unprecedented array of differing items, which may vary from hazardous materials to delicate clothing in the same shipment. Although this practice is beneficial for customers, it remains an issue for lost efficiency and errors within the shipping process. How does a shipper conglomerate all of these different items into a single shipment without risking damage or injury? The answer rests with attaining a flexible, smart system.
A flexible system allows shippers to quickly sort existing stock and compile shipments on smaller units. These individual packages are then added to tubs or containers slotted for less-than-truckload shipping to help move goods fewer times while reducing the number of times a worker must handle the product. By maximizing the use of space in an existing fleet to meet the demands of many different-sized items, a shipper can improve efficiency and flexibility.
The idea of flexibility due to improved processes leads back to inherent savings for labor costs as well. If individual workers are needed less for business operations, this means existing worker’s would have reduced workloads. This results in higher employee satisfaction rates and savings for the company on overtime hours or hiring additional workers.
Scalability and Retraction of Business Processes
Sometimes, scalability is only associated with a business’s growth. However, all businesses will suffer from the setbacks of fewer orders, reduced demand for products, or changes in the economy. Each of these factors could spell disaster without an efficient logistics and transportation management system.
If an existing operation has an excess of workers, a reduction in orders would lead to cutbacks across the entire enterprise. If the company’s production suddenly increases, previous employees may be unavailable or less inclined to work for the company. Unfortunately, every terminated or reduced-salary employee represents another possibility for the company to lose money.
Efficient Systems and Inventory Control For Scalability
Managing inventory in one location can be difficult; however, managing inventory in multiple locations becomes even more costly. An efficient transportation management system must be able to handle the addition of new inventory, users, and new locations. Without the ability to expand across multiple locations, an existing system would be incapable of effectively monitoring and managing a company’s inventory.
Similarly, inventory control is an important concept in the management of a single warehouse. Inventory control allows an organization to increase or decrease stock counts to meet the expectations of a given shopping season. For example, summer items will need to be increased during the warmer months, and holiday-themed items may need to ordered and stocked prior to the arrival of fall. The management system enables accurate inventory control through forecasting, which is the creation of reports for the expected needs of an upcoming time period. By analyzing order trends and current processes, the transportation management system can evaluate the company’s needs and adjust business processes to meet the demand. Essentially, the overall workload of inventory control is reduced as it pertains to scalability concerns.
Throughout the course of business, the demand for a shipper’s services will change. Sometimes, business will be in high demand, and at other times, business will seem to crawl at a snail’s pace. The overall goal of any logistics and transportation management system is to improve efficiency while maintaining optimized operations. By implementing an efficient system, the business can reduce or expand operations to meet customers’ demands.