The efficiency of implemented logistics processes determines a company’s position in a competitive market and its revenue. Little surprise: a company can double its profits only by reducing supply chain costs from 9% to 4%.

Constant process optimization is the key to keeping costs low. The focal point hereby lies on reduced resource waste, high productivity as a result of automation, and quick adaptation to looming challenges.

Integrating advanced digital technologies into logistics processes can help your business respond to diverse challenges, such as supply chain disruptions caused by geopolitical tensions, limited visibility and fractured processes, insufficient workforce availability, and more.

Let’s delve into the details to discuss actionable strategies and best practices that can help you meet increasing service expectations while decreasing the impact of challenges.

Logistics Processes: What You Need to Know

Advanced technologies can support the ultimate goal of logistics: meeting customer demand with minimum costs and timelines. The companies can optimize processes at all steps: planning, procurement, warehousing, inventory, transportation, fulfillment, and return management. 

To adjust to market demands and changing conditions, your company can build or implement a digital solution for real-time tracking, data analytics, and task automation. 

In particular, automation can reduce manual input in order management, route optimization, inventory control, and customer communication. 

Furthermore, automating the flow of goods and information allows you to balance required inventory levels, improve supplier coordination, and ensure accurate, transparent deliveries to customers. 

On the organizational level, automated processes enable your company to enhance operational efficiency, identify underserved demand, and respond quickly to market changes or supply chain disruptions. 

Five Key Strategies to Improve the Logistics Process

A definite strategy for improving logistics processes can make the difference between increasing your bottom line without compromising customer experiences and struggling to keep up with the expected financial performance. 

Here are five strategic tips to help you with performance optimization:

Leverage Technology and Automation

Implementing integral software is the best way to optimize processes quickly. The market is abundant in off-the-shelf software for streamlining various operations, such as WMS (Warehouse Management Systems), TMS (Transportation Management Systems), ERP (enterprise resource planning), and beyond.

However, when you rely on unique flows, you might need to consider building a custom solution for automating your logistics processes as it will best meet your business needs. 

Oleksandr Kachanov, IT Craft’s Head of Growth, points out, “Custom logistics development can be of big help when you want to retain hard-won best practices. Determine together with your engaged logistics developers the key points you want to automate with a custom logistics solution and let the developers focus on uninterrupted deliveries.”

Optimize Inventory Management

Several software suites can be necessary for efficient stock-level management. CRM software provides data from sales reports and generates forecasts on future demand to help determine optimal inventory levels and prevent stockouts.

Auditing functionality can decrease check time and help keep accurate records to identify discrepancies and areas for improvement.

Inventory solutions can be used to track stock levels in real time and send automated alerts when supplies are low. Moreover, the company can determine a reorder point formula based on historical data and available demand forecasts, automating supply reorders and avoiding unexpected stockouts. 

Inventory management software can also serve as a point of knowledge, eliminating disruptions if a responsible manager is missing and decreasing onboarding time for new employees.

Streamline Transportation and Delivery

Streamlined transportation and delivery are one of the main sources of cost reduction. You might need to implement several functionality sets or interconnected stand-alone solutions for different user groups. 

A Transportation Management System (TMS) automates sending requests for shipment quotes, determining the best-fit offer, dispatching orders, tracking shipment statuses, and retrieving documents.

A route planner can generate an itinerary within seconds, taking into consideration available orders, delivery windows, and drivers’ schedules. It can send the result to the dedicated app for drivers upon the manager’s approval.

A customer web portal or a mobile app can help increase transparency with timely delivery updates, while business clients will benefit from an API that will decrease the amount of required paperwork by exchanging data directly with their software. 

Enhance Warehouse Operations

Another essential point for cost reduction is a warehouse. A Warehouse Management System (WMS) enables real-time inventory visibility. When combined with RFID or beacon tags, WMS can be used to track ordered items and equipment, minimizing idle time. 

WMS helps accumulate data on warehouse performance, such as order fulfillment time, travel distances, inventory accuracy, and more. This information can be further used for lean layout design and streamlined dock-to-dock flows.

Also, consider building a digital twin, a virtual replica of an available warehouse that simulates objects, processes, and systems to examine optimization activities in a safe environment. It will let you evade process disruptions or performance degradation.

Foster Communication and Collaboration

Tight collaboration with suppliers, partners, and clients is critical for efficient supply chain management. Management software can streamline the information exchange, improving responsiveness and enabling 100% visibility.

Also, logistics software can be useful for maintaining internal standards, which you can share with new partners to improve their onboarding. You can consider preparing templates and wikis and integrating them into your logistics system. 

Furthermore, you can manage suppliers and clients efficiently by setting and automatically tracking measurable KPIs. Ensure the system collects historical data. Also, ask partners to periodically update information on available capabilities. This will allow you to quickly select the best-fit party for each order.

Conclusion

Digital technologies are a crucial component of operational optimization, uniting disjointed processes within a single, efficient workflow. 

Implementing relevant digital strategies in automation, inventory management, delivery, warehouse operations, and collaboration can help your business reduce workload, ensure high delivery accuracy, and enable quick operations.

As a result, technological transformation can become the key revenue driver, decreasing operational costs and improving customer satisfaction.