Transportation & Warehousing Poses Many Challenges

Transportation & Warehousing Poses Many Challenges

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Transportation & Warehousing is a major part of any supply chain. Businesses are faced with many problems with their warehousing these days. Most warehouses have operational issues that need to be streamlined.  Businesses want the warehouses to optimize their services to fulfill their needs. From the standpoint of the warehouses there are 4 issues they are faced with:

The supply chain is getting more complex

The level of complexity with all supply chains has increased with time. Customers want everything customized for them. They want to see more automation and want very efficient services. Modern tools and equipment along with enhanced processes are required to make operations meet the standards of clients.

Cost Pressures

It is important to stay competitive in the marketplace and for this reason, companies have to rely on cost reduction. Customers look for better rates and price shopping is the only way they can save money. In any growing business saving on transportation and warehousing is essential.  To save on the cost of production and offer good pricing to end users, companies are relying on off-shoring, on-shoring, and near-shoring. This also helps them make cheaper and faster deliveries.

Labor shortage

On-shoring is very common in North America. For example, if a manufacturer has a big client base n Mexico, they put up a factory there to save on the cost of production and transportation. The shortage of labor is there in these factories as no one is willing to work on small wages. New employees have to be hired and trained for the job. Another problem faced with warehousing is the expansion of inventory. Consumer expectations are very high as they want to use the customized goods that lead to SKU proliferation on store shelves.

SKU proliferation

Customers demand a wider range of products that lead to more development and introduction of more items for the warehouse to stock. All goods have to be delivered on time as per customer expectations. More items have to be held in stock due to same-day or next-day orders. The warehouses have to stock goods that are slow-moving, and these stay there for weeks and months. With advancements in technology, more items of the same type are being produced and distributed. The need for a strategy to remove old and slow-moving items is there to improve the inventory lifecycle management. The slow-moving goods need to be removed from the supply chain.

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 It is a real problem being faced by distribution centers and order fulfillment centers. In an effort to attract more customers and increase sales, more items are added for offering while obsolete or slow-moving inventory is also retained. SKU proliferation drives up the cost of customer services. This creates a new level of complexity for warehouse operations.

Supply Chain Management (SCM) inter-connects components including procurement management, logistics management, warehousing management, and customer service management. Many warehouses offer fulfillment services along with space. They have the modern software and the staff to work as your fulfillment center. The inventory management systems used by these third-party logistics providers are modern and can help an organization serve its buyers on time.

As a 3PL the warehouses that own trucks can help with production management as well. They can pick up the raw materials and drive it down to the factories to help with production. Once the contract is signed with the 3PL they can also help with business planning and organization. You can rent their fleet of trucks to haul your goods both locally and internationally.

Your business processes can be better integrated when you rely on a third party. They will be held accountable when things go wrong. Today’s market is very competitive and making strategic partnerships with suppliers, contractors, customer service specialists, distributors, logistics experts, and financial institutions is important.

In terms of transportation, the main problems faced by companies are the shortage of drivers and fluctuating fuel prices. Many companies do not pay well and the drivers are forced to leave their jobs in search for better money. Other companies do not train their drivers well enough and for this reason, the shipments do not reach their destination on time.  Some drivers do not like the working conditions. While for some, driving in extreme weather conditions may be dangerous.

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Transportation is the backbone of any supply chain and a lot relies on the performance and reliability of the transportation network. It is the main investment in the supply chain logistics cost and therefore is the principal element in it.  Oil prices rise and fall all the times and a rise leads to a hike in transportation prices.  The demand for oil is high and a shortage of supply sends the prices rolling upwards. Customers that have signed one-year contracts get the same delivery rates by the mile. This means low profits for the transportation company.

Author Bio

Ryan has been embedded in the transportation and warehousing industries in Michigan for many years. He is in his element discussing supply chain and milling around trucks and 18 wheelers.

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