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Logistics Jenga: The Art of Balancing Cost, Speed, and Sustainability

Considering that cost, speed and sustainability in logistics impact a company’s revenue and brand image, each of these attributes need to be managed adroitly

Logistics Jenga: The Art of Balancing Cost, Speed, and Sustainability
POSTED ON September 14, 2023 5:49 PM

Any business that deals with the movement of products must pay special attention to its supply chain and logistics processes. Logistics encompasses all activities that are involved in delivering a product to a customer—storage, inventory management, stock picking, transportation and delivery. 

This, in turn, is an important component of the business supply chain, a more comprehensive term covering all people and processes involved. A simple example is the sourcing of raw materials in the manufacturing sector.

Effective logistics is vital for the success of any business, especially start-ups. With the right strategies, they can reduce the cost of transportation, inventory management, and other distribution-related processes while enhancing customer experience. In fact, HR tech start-up Zippia mentioned in a report that reducing supply chain costs from 9% to 4% helped businesses nearly double their profits.

Gamification Is The Key

Logistics has its tentacles in multiple business departments, right from the manufacturing unit up to the customer, essentially covering the entire lifecycle of a product. With numerous moving parts, enhancing logistics processes is easier said than done. 

These numerous functions can be compressed into three core business parameters: cost, speed, and sustainability. Each of these impact revenue and brand image and needs to be properly managed.

Industry experience has taught us that the three are sensitive to each other, and improving one can sometimes adversely affect the other, creating a counterintuitive effect.

Much like the game of Jenga, where pulling out a tile in an attempt to win the game sometimes brings the entire tower down. This analogy is aptly suited to supply chain logistics, where the game of 'Logistics Jenga' involves the art of carefully balancing cost, speed, and sustainability.

However, it is possible to keep this metaphorical Jenga tower upright if one adheres to the following strategies:

Exploit technology: There's a reason I use the word exploit and not implement or leverage. It's because nearly every process within the logistics chain can be digitised, and businesses absolutely need to introduce as many technological solutions as possible. It's there to be used; use it!

Yes, there's a cost factor involved, but the losses due to the use of archaic methods are going to be even more expensive in the long run. In fact, a report by Procurement Tactics suggests that 67.4% of supply chain managers still rely on Excel spreadsheets. Moreover, 43% of small businesses don’t even track their inventory. That is quite a saddening fact in the age of AI.

There are separate solutions for inventory management, supply chain visibility, and fleet management, as well as collaborative platforms like Enterprise Resource Planning (ERP) that give teams complete control over the entire logistics process.

Track data diligently: How do you know if you're winning at Logistics Jenga? The only way is through data analytics. Diligently tracking data and using BI platforms to make sense of it is the key to enhancing supply chain logistics.

Cost and speed, especially, are parameters that businesses can accurately track and monitor using analytics platforms. Tracking truck routes and delivery times, for example, will help a business identify the most time-effective route for delivery and predict bottlenecks ahead of time. 

Pursuing product demand will help warehouse teams stock inventory in a way that is most optimal for stock picking. These are a few of the many positive examples of data analytics in logistics.

Data is more valuable than gold.

Be responsible—go sustainable: Sustainability is an important term in the logistics universe that uses trucks, machines, materials, etc. Most businesses that deal with delivery have a relatively larger carbon footprint, and it is important to balance this impact via other areas of the business.

Sustainability is easier today than it might have been a few years back. There are industries dedicated to manufacturing eco-friendly materials and packaging, electric vehicles (including trucks) and other green carriers, etc., and logistics businesses can partner with these businesses to maintain a sustainable practice.

There are other indirect methods, like donating to green initiatives, that you can look into if implementing sustainable practices within the company is not a feasible option.

The pandemic shook nearly every industry with a massive impact on those that involved physical contact, like businesses dealing in logistics. It was a crude reminder of how fragile the world of business is. The majority of retailers experienced massive supply chain disruptions due to COVID-19.

The impact of such Black Swan events can, however, be controlled and mitigated through proper planning. Modern trends in logistics, with technological advancements at the forefront, have made it possible to create a business strategy that is aligned with continuity (as little service disruption as possible).

Logistics is more than a business process. Logistics is essentially one of the primary drivers of trade and economy, helping regions connect and flourish. It is also, therefore, an incredible responsibility that businesses have to take seriously.

-Nayan Ratandhayara, co-founder and CEO of Shipyaari

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