With the restrictions imposed due to the Covid-19 pandemic now relaxed in the majority of states, the economy is beginning to bounce back. Following months of limited opportunities and inclination to shop, factors such as the vaccination drive reduced restrictions, and recent stimulus payments mean consumers are now racing to purchase fresh items. For businesses, many of whom have been hard-pressed during the pandemic, the surge in consumer activity is an excellent opportunity to begin to turn around months of stagnant or falling profits.
Unfortunately, logistical problems are preventing many companies from optimizing the opportunities currently available to them. Delays and disruptions to domestic and international supply chains, as well as changing consumer expectations concerning the delivery of their orders results in businesses being faced with some difficult decisions in order to meet their customers’ expectations.
Here we consider the key challenges that contemporary businesses face with respect to their Retail Logistics, as well as some solutions that could aid competitiveness, improve customer care and ultimately lead to a larger number of sales and enhanced customer loyalty.
Recent figures showed that back in 2019, prior to the pandemic, the US was already short of about 60,000 truck drivers. Research suggests this figure is likely to rise to around 100,000 in the next three or four years. With fewer drivers available, ensuring businesses have sufficient manpower to fulfill their logistical commitments becomes problematic.
Labor shortages aren’t just confined to truck drivers – studies show that a significant proportion of people in the workforce are considering a change in career following the pandemic. Of particular importance are opportunities for home working – which is clearly impractical for the majority of hands-on logistical roles. Many workers also cite the increased importance of a healthy work/life balance – something that can be a challenge to achieve in a logistical role, where freight workers frequently work antisocial hours and/or are away from home for protracted periods of time.
In summary, domestic labor issues are having a particularly marked impact on the transport and Retail Logistics sector.
Almost inevitably, supply lines became severely disrupted globally at the height of the pandemic. Lockdowns not only meant that the supply of a wide variety of products was disrupted, but it also meant that demand for raw materials, components, and various other items also plummeted. For example, the domestic auto industry reduced production in 2020 by around 20%.
Moving forward, as lockdowns and related restrictions become more relaxed worldwide, manufacturers have begun to scale up production again – workforces are able to operate more easily, and there is an increased demand from consumers for products.
Unfortunately, the dramatic rise in imports has created significant congestion at major US ports. Some of the congestion is due to increased regulatory requirements due to Covid prevention measures, but the main reasons are simply down to increasing freight and ports that don’t have sufficient capacity to manage.
The rise of mega-container ships enables a single vessel can carry two or three times more freight than a traditional container ship. Other contributing factors to the crisis include a shortage of containers (this is a worldwide issue), and delays in moving freight from the ports onward to its next destination.
The net result is that many businesses face difficulty in accessing the supplies they need for successful production. It also means consumers are encountering scarcity when they shop, with empty shelves a common occurrence as various imported items become stuck in the port backlog.
Although high numbers of vaccinated individuals, alongside more effective methods of managing Covid, have meant that restrictions affecting logistics can be relaxed, Covid cases continue to impact almost every industry.
Not only are Covid sufferers absent from work, those close to them may also quarantine, creating a significant reduction in workforce numbers. Covid outbreaks may mean that enhanced shielding, tracking, and monitoring strategies need to be employed, all of which can slow down Retail Logistics.
Uncertainty around the potential for federal and/or state restrictions as winter 2021 approaches causes further difficulties in establishing long-term logistical solutions.
Customers now expect far more when it comes to their purchasing and delivery experience. Not only is speed absolutely critical, but customers are also favorably influenced in their purchasing decisions by the availability of options such as omnichannel ordering, timed deliveries, deliveries outside normal working hours, and free shipping.
For businesses fighting to increase profitability following the lean times of 2020, staying ahead of customer demand is critical. Research shows that logistics play a key part in the customer experience, often ranking more highly than price or product quality in their decision-making.
At a time when resources for fresh products and ways of working are typically stretched, is there anything that businesses can do to offset the logistical problems that a shortage of truckers, supply chain disruption, continuing Covid issues, and growing customer expectations can cause?
Although it may seem counter-intuitive to invest in fresh technology at a time when the business finances are in a parlous state, investment in the right tech now is likely to reap dividends not just in the short-term, but also over the next few years.
Investment in integration technology, a high-grade e-commerce platform, and adopting an omnichannel marketing approach enables a business to keep up (and, in some cases, surpass) customer expectations.
Regular communication with customers regarding the progress of their order (through integration technology), as well as convenient, responsive ordering methods, provides a powerful inducement to buy. Omnichannel marketing ensures a seamless buying experience – whether a customer accesses your platform via their phone, laptop, or in real life, they can still get the same options to access their account, return to a partially filled basket or carry out any other transactions relating to their order.
Withstanding disruption in the supply chain is a critical component of successful production. There is a range of strategies that can be employed, depending on the nature of the business. At the core of any successful response to supply chain issues is strong planning, including risk assessed, costed options.
Plans need to be regularly updated and reviewed, to ensure they’re still relevant. Strategies that may be deployed to shore up failing supply chains include:
Currently, a shortage of semiconductors is having a significant effect on US vehicle production, as well as affecting the production of everything from Apple iPhones to domestic appliances. The shortage is, in no small part, due to manufacturers increasingly outsourcing the fabrication of semiconductors abroad.
When the semiconductor supply chain was adversely affected by the pandemic, auto manufacturers and others didn’t have domestic manufacturers to fall back on, creating significant production problems.
Whilst the shortage of semiconductors is the subject of government attention (a package of aid to stimulate the domestic semiconductor industry is currently being considered by the federal government), the reasons for it are replicated across a range of other supply chains.
Moving forward now is probably the time for businesses to reconsider where their raw materials and components come from – global supply chains are likely to remain uncertain in the foreseeable future, meaning increased reliance on domestic options may, ultimately, be the wiser choice.
Historically, production costs have played a key role in influencing the decision to outsource abroad. In the current climate, it may well be that the increased cost of domestic production is less than the losses incurred by over-reliance on overseas suppliers for materials and components.
With many companies looking at ways to conserve resources, resourcing an in-house logistics team to ensure that this critical aspect of operations is taken care of successfully can be a challenge. That’s why a growing number of businesses are outsourcing the logistical support they need to professionals.
A professional Retail Logistics company has a wealth of experience and expertise to draw on, optimizing the chances of getting the results that you need. In addition, a contractual arrangement for the delivery of the logistical support you need relieves your company of responsibility for managing a logistical workforce and investing in logistical infrastructure.
For companies seeking a fast, effective solution to their logistical requirements, outsourcing to professionals, such as the highly experienced and skilled team at OGLWW, is frequently the best option.
OGLWW draws on decades of collective expertise from a carefully chosen team of logistics experts. Offering affordable, effective logistical support for global supply chains and end-to-end supply chain solutions.
Get in touch to find out more.
Onsite Global Logistics is a third party logistics provider 3PL helping companies with innovative global logistics and supply chain solutions
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