Improve Your Small Business's Logistics
Logistics is the silent, steady, and invaluable element of any warehouse chain. When it’s all good, nobody notices, and things flow as naturally and seamlessly as intended. But if one cog is even a little off-kilter, everyone notices. And not just your team — customers eventually pick up on it.
The telltale signs aren’t hard to spot. The most frequent occurrence is having a ton of orders in the queue but not enough volume to fulfill them, which indicates a supply chain breakdown. There are also inventory discrepancies (e.g., overestimating current stock, underestimating future stock needs, etc.), not leveraging economies of scale, and devoting more time to operations than growth.
Yes, there are surface-level signals that spell out how effective or ineffective your logistics might be at this time. But there are more granular, measurable numbers that can speak loud volumes about where your logistics is and where it could go.
What’s the Holdup?
There’s nothing subtle about a logistical stalemate. Employees feel it when their end-to-end fulfillment processes grow longer and more complicated. Customers bear the brunt when orders get messed up, are incomplete, or take longer than promised. That only looks at the what, though. Why do these logistical logjams keep happening?
More often than not, it’s because the processes you have in place probably aren’t clicking the way you figured they would. Brands that experience logistical snafus typically lack a dedicated technological or integrated system, choosing instead to patch a few different solutions together (e.g., Sheets, ShipStation, or Shopify) to plug holes.
On top of system breakdowns, merchants’ lack of logistical or supply chain expertise can also adversely affect operations. Merchants know their own systems and care little about others, so panic can ensue when logistics hits the fan.
Neither roadblock is hard to bypass or repair, though. For starters, invest in a tech solution that helps your team forecast potential logistical obstacles. It’s more challenging to keep things moving when you continuously play from behind, but powerful technology allows merchants to take stock of inventory, software integration, and fulfillment management.
The solutions you put in place need to promote a transparent look at every part of the logistics chain and point out where any holdups are occurring. Supply chain visibility is a struggle and priority for just about any company looking to make wholesale improvements to its logistics systems.
Transparency also highlights the issues and — more importantly — the metrics merchants need to heed to improve logistic output. With the aforementioned knowledge and systems in place, those metrics become more apparent and easier to rectify.
Logistic Measures That Should Speak to You
If numbers don’t lie, merchants must look at figures that can inject some truth into their logistics struggles. When trying to get a clear sense of where your supply chain bottlenecks are happening, lean on the following measurements:
1. Throughput: In manufacturing, this is how much — on average — a solution is putting out during a given time. Merchants looking to increase throughput must better calibrate parts of a solution so that downtime, stoppages, and touchpoints decrease.
Though it’s not a perfect comparison, logistics supply chains can apply those same principles to their own technology. Look at your supply chain solution and consider how many orders you’re putting out daily. Examine elements such as receiving, replenishment, and inventory while working to tie how your system affects your ability to put out as much product as possible.
The output is the most obvious indicator of success. Throughput adds an extra layer of insight that can’t be ignored.
2. Cost Per Order: This is a deeper dive into profit margins. Examine how much you’re paying in terms of labor, space, and systems to third-party logistics while tying those investments to each order delivered.
Another way to look at it is “order to cash,” or OTC, which measures how much spend it takes to push an order from capture to fulfillment. That process includes an order’s picking and packing; it's dispatching, shipping, and delivery; customer billing; and the reception and recording of payment.
Each portion can indicate whether too much or not enough time is spent fulfilling an order and point to specific points of the logistic chain that need improvement.
3. Accuracy Rate: Log the number of issues your orders are experiencing. Errant items might carry a low cost, but look at how those mistakes add up and impact your brand.
Once you identify where any missteps are occurring, incorporate those findings into your logistics process to perfect it. Look at on-time deliveries, in-full deliveries, damage-free deliveries, and accurate documentation. On their own, these minor missteps point to individual logistic failings. But as a whole, they shine a light on how the chain can work better in unison.
Logistics says a lot about how smooth the customer experience is. Let cold, hard numbers tell you where you’re good, where you can be better, and what’s necessary to make the supply chain the best version of itself.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.