What are the consequences of inefficient logistics?

The growing need for consumers to use e-commerce to manage their purchases posed a significant challenge in logistics for companies, not only because the demand for products increased through this channel but also because the average online shopper is more demanding when it comes to delivery times. This has led to a particular focus on resolving last-mile issues.

<<<Ways to improve the logistics last mile>>>

Every company is different and has its own ways of managing logistics processes. This has an impact on supply chains when they face various problems that require changes or improvements to their business requirements. Logistics management is crucial for any business because it ensures that the supply chain, including shipping and delivery, is carried out as efficiently as possible.

Improving the logistics management process will result in increased productivity and operational efficiency over time. In this article, we will analyze the potential consequences of inefficient logistics and how to learn to develop a more efficient and faster process from the customer's perspective.

What does it mean to have inefficient logistics?

Inefficiency refers to the inability to perform a task optimally using the least amount of resources possible. This does not mean that the task itself is not accomplished, but rather that it is not completed in a timely manner. In this sense, logistics is considered inefficient when the malfunctioning of its processes, failure to meet delivery deadlines, and increased costs lead to overspending, waste, loss of time, and a generally negative customer experience.

<<<Main problems in product distribution logistics>>>

Key problems of inefficient logistics

Logistics processes account for 30% of all work in companies, so if you have an inefficient process, you will be losing money and time, which translates into failure to meet customer expectations and the potential loss of customer support and loyalty towards the brand.

1. Lack of formalized processes.

One of the main problems in logistics is the lack of formalized processes. This is crucial for having better traceability of products from the moment the company engages with suppliers to obtain raw materials until the finished product is ready for dispatch and begins its journey to the end consumer.

Without a formal process that allows for accurate identification of each stage in the supply chain, there is no way to measure the efficiency of the logistics process. In the long run, this will result in inefficient logistics that constantly generate uncertainty for customers.

2. Lack of measurement and indicators.

If logistics processes are not formalized, measurement and tracking become impossible, which means you won't have performance indicators to detect failures and opportunities for improvement based on accurate data. Instead, you can only access some data obtained intuitively, relying on rudimentary tools such as a watch to calculate the elapsed time of a delivery, WhatsApp messages to communicate with transporters, and requests for reports.

<<<Traceability in logistics. Why is it important?>>>

3. Unfamiliarity with logistics routes.

In a local flow, if the logistics manager is not properly informed about transportation routes, the lack of information can lead to unexpected challenges in day-to-day operations. For example, not being aware of a road closure due to a protest can catch a transporter off guard, requiring them to change their route, which will likely delay the delivery.

If the main route for cargo leaving the country is under repair, an alternative route or detour must be taken to fulfill the delivery objective. Knowing these details in advance allows logistics managers to provide the necessary instructions to chart an alternative route.

4. Vehicle authorizations.

Another problem that can lead to inefficiency in logistics is when transportation vehicles are not authorized to cross a country's border and are detained at customs. This will result in delivery delays and waste time as you have to justify your transporters' activities to customs personnel and provide any necessary documents to avoid fines, penalties, or, worse, the suspension of their driver's licenses.

5. Risks of cargo quality and security.

Cargo that remains in the sea, ports, or customs for a longer period of time not only causes delays but also imposes risks to quality and security. The cargo may need to endure high temperatures and humidity and may be exposed to other external conditions that are not suitable for perishable products, not to mention the security risks caused by multiple door openings.

The time during which the quality of perishable products remains acceptable is brief. Deterioration in product quality over time can lead to food safety issues and waste. With real-time data information, transporters can approach their customs agents, express their concerns, and see if there is a way to clear the containers in advance to avoid warehousing.

Alternatively, the customs agent now knows the container door openings and can approach the customs authorities managing the warehouse to enhance security. Additionally, if any of the problems occur recurrently, cargo owners can use the data to address the identified inefficiencies.

<<<Consultative selling in logistics: Understanding customer needs>>>

Consequences of inefficient logistics for companies

The projection over time of the aforementioned problems will result in numerous consequences or negative effects on the logistics process, which could further aggravate a company's current situation, leading to significant economic losses due to faulty products, poor cargo transportation routes, and considerable delays in order delivery. In broad terms, these are the most frequent consequences that arise, but other possible consequences include:

1. Inefficiencies in production.

When your team does not function as a cohesive unit, your business can be negatively affected. Implement a system of double verification to minimize human error and avoid duplicate shipments by increasing the flow of information throughout the supply chain. Make sure that each member of your team understands their responsibilities and roles correctly.

2. Low customer satisfaction.

Having satisfied customers with your business and products is an important goal for any company. A satisfied customer keeps coming back. If the time between placing an order and the delivery of goods is too long, customers may seek to have their needs met elsewhere, where they receive the efficient service they expect.

3. Inefficiency in transportation.

When transportation is not properly planned and implemented, it will affect delivery deadlines. Additionally, there is the possibility of goods being damaged during transit, which can have a huge impact on the results. Furthermore, higher transportation costs will ultimately translate into higher prices for the goods. To avoid these problems, better plan your routes and ensure each shipment is complete. If necessary, redesign your packaging to minimize weight and size without sacrificing quality and safety.

4. Poor warehouse management.

Your warehouse is a crucial part of your company. Properly managing it means that everything, from product quality to delivery times and inventory management, functions well. Otherwise, production may slow down and generate a lot of waste. The type of product you trade determines how your storage operates. Focus your efforts on reducing waste and speeding up operations. Help your staff weigh products more quickly and accurately by installing suitable industrial scales.

5. Resistance to implementing automated technologies.

Technological innovation seems to be part of every industry these days, and business logistics has embraced it without hesitation. There are new ways to accelerate organizational efficiency and reduce manual intervention that leads to errors.

For example, you can consider an intelligent weighing scale that integrates inventory management and communication software, which can provide real-time updates on goods movements. Investigate which solution will address the specific challenges your business may face today while making it much more profitable.

<<<Main communication channels in the logistics industry>>>

In conclusion, prolonged inefficient logistics will generate many consequences that will directly influence the profitability of your company. Paying attention to all the details concerning logistics processes, such as formalizing the entire process, generating indicators, and maintaining vehicles properly, will help prevent consequences related to poor time management and excessive resource expenditure, which often result in permanent losses.