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Biggest Business Problems Most Logistics and Supply Chain Companies Face

June 2, 2020
Volodymyr Rudyi

Logistics and supply chain companies face several interrelated business problems:

Forecasting Demand When There’s a Lack of Visibility Into the Whole Supply Chain

A supply chain consists of several different companies, each with critical data sitting in their own silos. Therefore, it can be really challenging for companies to make good decisions when they don’t have access to the data of other interdependent companies in their supply chain. So, each company only sees a small subset of the big picture.

For example, Storeroom Logix, a technology company driven to find better ways to process and use data, needed greater visibility between distributors and their customers. When distributors are able to see their customers’ real-time inventory, distributors can forecast demand more accurately. Conversely, customers can make better plans when they know a distributor’s inventory.

Adapting to Changes in Demand

Without knowledge of each party’s data, it’s really difficult to predict and adapt to changes in demand. Companies end up having to invest in safety stock, or buffer stock, to prepare for spikes or surges in demand.

The coronavirus pandemic in 2020, while considered by most to be a black swan event, proved incredibly challenging for logistics and supply chain companies. Demand in many product categories suddenly surged to unprecedented levels based on a once-in-100-year, global, public health emergency.

The High Costs of Manually Tracking Inventory

In addition to making systems investments that allow for each party to see each other’s data, tracking warehouse inventory can get really expensive, really quickly.

When you have a big warehouse or several warehouses, and there’s no technology or very limited technology, employees must physically walk around the warehouse, perform inventory checks, make cycle counts, and resort to many manual, labor-intensive activities. This manual approach becomes time-consuming and quite expensive.

Most companies in this situation feel competitive pressure to move faster and reduce the high costs of manual labor.

There are also industry-specific considerations that can impact the kinds of challenges faced by logistics and supply chain companies. For example, regulatory compliance can introduce time and financial burdens.

What business problems is your logistics and supply chain company facing? Share your comments below.

And if you’d like to learn how to accelerate your growth, download our eBook, “Navigating Logistics and Supply Chain Problems That Stand in Your Way of Growth.”

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