The logistics process is made up of many aspects, including inventory management, warehousing, packaging, labelling, billing, shipping, returns and so much more.
But in the era of e-commerce, where retail giants like Amazon have set the standard for delivering goods within as little as 24 hours, the logistics industry has had to go through some huge changes over the last few years.
And these changes were only accelerated by the recent COVID-19 pandemic, which saw the e-commerce industry sky-rocketing as more people than ever before have turned to online shopping.
In this guide, we’re going to look at just six of the ways that the logistics industry has developed in order to keep up with this increase in demand. These include:
1. The creation of more warehouses
With more retailers choosing to set up their businesses online, many are either dropping their high street store, or they never had one in the first place. This means there is an increased need for home delivery, logistics management and more fulfilment and distribution facilities.
Because of this, many are calling for the government to make additional warehousing an integral part of their infrastructure planning moving forward.
What’s more, many have begun to fund or create their own storage space if they are unable to find space to rent or buy. This might be at their home or in a professional setting; either way, it’s important for managing their stock and shipping their goods.
2. More businesses are relying on third-party logistics
Third-party logistic providers (also referred to as 3PL) offer logistics and supply chain management to businesses. Essentially, retailers can outsource elements of their distribution, warehousing, fulfilment and more to these providers.
They do this to save time and money as it eliminates the need for them to invest in their own warehouse space and to deal with many of the time consuming and costly logistic processes, such as shipping.
It also makes it easier to scale operations up or down and is a lot more flexible for businesses.
Due to the increase in demand for online retailers, there has also been a huge increase in businesses relying on these third-party logistic providers. This helps them to save money and avoid the stress of having to find storage and deal with shipping and logistics themselves.
3. Reverse logistics has also become a key priority
Reverse logistics management is all about the returning of goods back through the supply chain with a focus on retailers offering the best possible experience.
It also includes some of the value-added services that companies provide after the point of sale, such as confirmation of returns, refunds, etc.
The need for reverse logistics has become a key priority for many retailers in recent years because of the increase in people ordering multiple products online and sending back the goods they don’t want.
Whilst returns have always been there, online retailers are currently fighting to be competitive, so they must continue to offer a good consumer experience even after the point of sale and once a return or exchange has been made.
This means receiving and processing returns as quickly as possible to get refunds or exchanged products back to customers as swiftly as they can. Many companies, as well as third-party logistics providers, have had to embrace reverse logistics more and more.
4. The logistics industry has had to adapt to be more elastic
Because of the fluctuations in e-commerce sales throughout the year, supply chains must be ready to expand or shrink as needed, depending on demand.
This means businesses in the logistics industry need to be responsive, and as such, many retailers have begun to embrace what is known as ‘elastic logistics’. This type of logistics also highlights the benefits of using third-party providers even further.
This is because 3PL companies have the flexible infrastructure and labour capacity that retailers need to match demand whilst maximising profit margins.
5. Businesses are looking for more sustainable solutions
It’s important to note that logistics and the supply chain are no longer linear but rather they are circular. This means that lots of suppliers, whether online retailers or third-party providers, are trying to find new ways to reuse and reclaim materials.
They do this for a number of reasons, firstly, to save money and cut costs in order to remain competitive.
Plus, with the government trying to crack down on waste, single-use plastics and other environmental issues, businesses are increasingly being encouraged to take responsibility for their own actions.
But more than this, it’s also about being more environmentally friendly and being able to use sustainable practices to appeal to the younger generation and those who support eco-friendly brands.
This move towards sustainability has seen the logistics industry doing its best to create more resiliency within the supply chain, which in turn will create more sustainable and long-term value and growth for retail businesses.
How does this fit in with keeping up with demand?
Well, more and more consumers are doing research into the brands they’re buying from and being more selective. Therefore, retailers want to show how their products and logistics are better for the planet.
6. Embracing digital development and automation
Last but not least, the logistics industry has had to embrace digital development and automation in a big way. This is because so many businesses have already begun to embrace technological advances, and those that don’t will get left behind.
The modern consumer wants a great experience and fast results, and once they’ve placed an order, the rest is down to the logistics and supply chain. This is why providers have implemented tools and systems such as:
- Advanced inventory sensing systems
- Predictive insights
- Live traffic updates and the ability to choose the best shipping routes
- Robotic warehouse ecosystems
And these are just a few examples.
Plus, digital development and automation are able to save businesses a lot of time and money. Even if it does require an initial investment, this helps retailers to stay competitive and increase profit margins as much as possible.