5 Steps to improve operational efficiency in logistics

The logistics industry, a cornerstone of international trade, is projected to reach $18.23 trillion by 2030, growing at a CAGR of 10.7% from 2023 to 2030. As such, it plays a crucial role in the global economy, enabling businesses to establish their presence in the international market.

Supply chains, once fairly linear, have evolved into complex and continually changing networks. The shift from multichannel to omnichannel retailing has provided consumers with multiple purchasing channels – websites, physical stores, mail orders, catalogues, face-to-face sellers, and more.

Why is operational efficiency so important to the logistics industry?

Emerging delivery trends, such as same-day delivery, in-store pick-up, cashier-less retail, and “no questions asked” return policies, have put traditional supply chains under immense pressure as they strive to keep up with shipments amidst ongoing labour shortages.

Merely transporting goods from point A to B is no longer sufficient. Agile logistics management strategies are essential to remaining competitive in a demand-driven, volatile marketplace.

Logistics management is more than just considering the shipment of goods. It involves maintaining a strong foothold in the marketplace, ensuring business continuity, and job security for warehouse workers. It includes strategic steps to boost operational efficiency by optimising the planning, implementation, and control of transportation and storage of goods between two points.

(Truck unloader at S&S Activewear using TAWI container unloader)

What is logistic efficiency?

Logistics efficiency measures how goods and services are moved from point A to point B. It encompasses all aspects of the delivery process, including loading and unloading, route optimisation, inventory management, and much more. An efficient logistics management plan can help reduce costs, maximise business, and ensure customer satisfaction.

Creating and managing a highly efficient logistics system requires careful planning and execution. It involves understanding customer needs, tracking freight in real-time, maintaining accurate inventories, and utilising organisational resources effectively.

The logistics sector has experienced a boom in recent years, benefiting from recent technological advancements, globalisation, integration, new legislation, and new alliances between different countries.

The consequence of poor operational efficiency

However, poor logistics and supply chain management can be costly in more ways than one. Not paying close attention to the logistics of your business can impact its bottom line and harm its brand reputation.

Delays can occur at various stages:

• Manufacturer delays: due to human error, inaccurate inventory tracking, back-ordered materials, or poor demand forecasting.
• Production delays: due to global externalities that launch a domino effect in the supply chain, impacting orders in the production segment.
• Warehousing delays: due to a lack of on-site storage space, or the business lacking dynamic strategies for warehousing, like storage or labour shortages, fulfilment, and transport of goods. Operations may become slow, and the warehouse may generate a lot of material waste.
• Shipping delays: suppliers rely on collaborative order management to prevent common shipping mishaps in last-mile delivery. Shipments can be delayed due to damaged orders and drivers not being on schedule.

The cost of poor management can be high. Delays in operations often lead to high project costs. A customer is more likely to return a product if delivered to them in a defective condition, sometimes demanding compensation with a new package or refunds. Last-minute deliveries will cost more than scheduled shipments.

The cost incurred by sending compensation products, the return logistics, labour costs, and managing damaged products will consequently add to the overhead costs of your business. Meanwhile, cost will go up whilst no value is being added to your project.

Not only does poor logistics management cost you money, but it can also cost you some meaningful relationships. This can then snowball into lost business as your relationship with clients deteriorates, so they opt for other businesses to handle their logistics. This damage doesn’t stop there. Often unhappy clients don’t stay quiet, speaking to others in the sector about the services they use. If you provide a bad service, word will get around, meaning you must triple your efforts to salvage reparations.

TAWI: comprehensive solutions for operational efficiency

We believe that knowing the ins and outs of an issue is the first step in finding a solution. That’s why we have provided a comprehensive breakdown of what logistics management is, why it needs to be done, and the possible consequences of not investing time and thought behind it. Next comes the actionable; perhaps the reason why you have wound up on this web page. Well, you are in the right place.

Technological advancements have increased operational efficiency, and thank goodness it has given the projected growth of the sector. Technological advancements include biometrics, AI, IoT, and material-handling equipment. They enable businesses to work more efficiently, driving worldwide market growth. The continuing surge in e-commerce and online shopping also supports the market’s growth.

Here are the top 5 steps to improve operational efficacy:

1. GPS tracking: invaluable to logistics management because it gives managers up-to-the-minute data about their fleets and shipments. GPS is beneficial because it enables suppliers to track shipments and give your business precise information about when you will receive them.

2. Information management systems: boost your efficiency by giving you a centralised digital repository for data, so you’ll always have the information you require readily available. When you need different departments or locations to work seamlessly together, an integrated information management system keeps everyone on the same page by providing access to essential inventory data and other information.

3. Automation technology: enables you to develop more efficient logistics by repurposing your existing workforce as well as enhancing safety. Using machines for lifting helps reduce risks of accidents without you needing to cut out your workforce as a human is still needed to operate the machinery.

4. Determine key progress indicators: this will help you assess your performance, and adjust your protocols as necessary. KPIs might include the number of deliveries made on time, your order cycle time, or your transportation and warehousing cost. By developing and monitoring your KPIs helps make your logistics strategy more accurate rather than relying on guesswork. It gives you concrete metrics with which to measure your logistical efficiency and evaluate your progress.

5. Training and development: It may feel quite rudimentary but sufficient training for your workers is significant to boosting logistics efficiency. If you are investing money in technology, you must invest in training workers to feel confident when using it.

A solution extends beyond a single product

It’s a strategic combination of diverse solutions that fortify your company’s resilience to growth and change. At TAWI, we offer expert guidance rooted in our industry insights and our vacuum lifters. These lifters, capable of handling a wide variety of goods without causing any damage, have consistently demonstrated greater performance compared to manual handling. This is the TAWI commitment – enhancing productivity whilst ensuring safety.

Expand your knowledge and explore proven solutions with TAWI, read “The Complete Guide to Improving Efficiency within Warehousing Logistics (How You Can Strike a Balance between Productivity and People)”.

Watch our logistics spotlight video: