Main problems in product distribution logistics

The product distribution logistics market is in constant transformation at a global level. It is for this reason that companies currently face different problems that represent real challenges to overcome to maintain the efficiency of their production processes over time, and that customers are satisfied with the product they receive.

In this sense, although many industries remain in the market or at least do not suffer major profit losses, the truth is that the exponential increase in online commerce has marked a turning point in the way of thinking about product distribution logistics.

The fundamental reason for this incidence of electronic commerce is the inclusion of new technologies and business strategies to satisfy the growing demand of increasingly demanding consumers for the quality of the products and the efficiency in their distribution.

This new reality forces companies to consider different solutions, more focused on customer needs, to solve problems that arise in product distribution logistics.

A common problem of inadequate management in product distribution logistics is, for example, not having vehicles with inadequate technological conditions for the distribution of goods or not being able to generate continuous dispatches in the same sector.

There are more types of problems in product distribution logistics, and knowing them will help you identify if any of them are occurring in your company and how to stop their negative effects. Next, we reveal the most frequent ones.

1. Uncertainty in the management and delivery of dispatches.

A significant number of companies around the world that offer the option of dispatching products end up subcontracting transport services to third-party companies, a practice commonly called outsourcing.

The problems here reside, specifically, in the fact that delays are generated when picking up and delivering the goods, operational failures in the transport network, unplanned vehicular traffic, unplanned changes in the distribution route, and delivery failures, among other issues.

Consequently, customers' perception regarding problems in distribution logistics will echo their disagreement with other customers to whom they do not recommend your products and poor distribution service.

2. Low quality of distribution service and customer experience.

A high percentage of customers who had a bad online shopping experience do not make purchases on the same site again, according to recent research by the consulting firm RightNow. For this reason, it is so important to provide good shipping management to avoid problems in the logistics of product distribution that harm the customer experience.

But not only poor logistics management implies losing customers, but it also entails a large amount of extra costs for product transfers, refunds, claims handling, product reshipments, etc.

3. Logistics distribution costs.

Currently, costs in product distribution logistics can represent amounts greater than 30% of the value of the product, due to expenses related to storage and transportation.

However, ground transportation and distribution costs present other issues to consider, such as the transportation costs of finished goods, the cost of order processing, inventory of ready goods, administration costs, and overheads related to logistics distribution.

However, customer service costs are measured based on percentages based on delivery compliance, average inventories, total orders, and percentages of gross sales, differentiating customer returns for the reasons that go.

4. Interaction with internal and external customers.

Respect for customers must be a priority for carriers if you intend to maintain your clientele and not lean towards the competition. Since although no customer likes to endure delays in the delivery of their product, they also do not tolerate impolite, unfriendly, sullen, inattentive, or directly aggressive treatment.

Even the way you treat your customers speaks more about your company than a delivery delay because in every human company there are operational errors, but the positive thing is that they can be corrected. On the other hand, aggressive treatment is never forgotten in the memory of the customer, and it is a sufficient reason to bankrupt a company.

5. Low responsiveness to unexpected distribution logistics problems.

The inability to resolve unexpected logistics distribution issues can cause the supply chain and deliveries to be affected by delayed management reactions to distribution issues. Following this, it is crucial to manage all the historical information on distribution logistics.

6. Operational failures in the transport company's network.

Carrier operational failures occur when companies hire (or subcontract) informal carriers. To ensure that the merchandise reaches its destination and that you can successfully solve logistics problems during the journey, it is imperative that you hire an external transport provider to streamline the distribution and delivery processes of your products.

7. Absence of physical support regarding the delivery made.

Due to the sustained growth of the demand for online products, and at the same time, of delivery services, one of the most common problems in product distribution logistics has arisen for customers when they must receive their product: that itself does not arrive at its destination, is delayed or appears damaged in the packaging.

It may also happen that customers' claim is not justified. Generally, it is, but it is also likely that a state of anxiety prompts them to claim without proof of what they are saying. For example, to claim that a product did not arrive when it was shipped, the company can use as physical support the screenshot with the completed shipping process.

8. Store returns and products for sale, all in one place.

Imagine that a product is returned to you that a customer did not want because it was not what he/she expected or it had a factory fault -in the worst case-. You're supposed to separate that product from the ones still on sale to keep track of those negative costs.

However, some not very perceptive companies store these returned products next to those that are for sale, creating confusion when it comes to dispatching new shipments. For example, a customer receives a product that has already been returned. But not only the disastrous customer experience with the product, but also the company's problems in carrying out inventories, separating between returned and salable products.

These problems that we analyze exist or once existed in most companies, and for the same reason that they are more common than you think, they have a solution.

Now with this brief checklist, you can already identify the problems in product distribution logistics that you may be experiencing and not have noticed. It's time to get to work, redefine and improve your logistics processes, seeking to provide your customers with exactly what you expect to receive from your favorite brands.