Do Any of These Logistics Scenarios Sound Familiar to You?
Each of the Above Scenarios Describes a Logistics Bottleneck.
Whenever you find yourself waiting on one piece of information, or one return phone call, in order to keep an order moving – that’s a bottleneck. Whenever you’re surprised to find a truck at your loading dock that you were expecting next week – that’s a bottleneck. When a seemingly simple situation leads to orders being delayed, shipments being unaccounted for, or needed information missing – you’re dealing with a logistics bottleneck.
To build resilience, it is necessary to look at your end-to-end supply chain and identify the potential bottlenecks that could keep you from achieving the desired results. Solving an issue in one part of the supply chain can be completely pointless if it is offset by a new roadblock somewhere else. As the market situation changes constantly, the challenge is to gain visibility into your complete supply chain to pre-empt and correct minor issues before they become major ones. In many cases, bottlenecks come from:
"Visibility was a major pain point, to the extent that our inbound shipments would sometimes just turn up at our warehouses unexpectedly. This had significant consequences across our business."
Operations and Business Development at NA-KD
Four Root Causes of Logistics Bottlenecks
Despite the seemingly diverse scenarios highlighted above, the majority of supply chain bottlenecks can be tied to one of four interconnected root causes: lack of visibility, lack of control, lack of communication, and lack of data.
Not Mitigating These Root Causes Will Cost Your Business
As with any business decision, there are costs associated with leaving the cause unaddressed. A European retailer, Blokker, was paying €600,000 a year in fines and penalties due to not being able to see where their stock and containers were.
Upstream visibility into inventory-in-motion can be a significant value driver as well. BCG research showed that a 15-30% reduction of working capital could be achieved through better visibility of end-to-end inventory in the supply chain.
More Examples of Not Mitigating Bottlenecks
It is possible that addressing one cause simultaneously can lead to other causes being mitigated and further bottlenecks being cleared. However, what is even more effective is working towards full end-to-end data visibility, thus enabling each of the other root causes to be mitigated in turn. In taking a holistic approach to your supply chain, you’ll be best positioned to make data-driven decisions based on accurate data.
“Knowing what is going to arrive at our distribution centers at any given time allows us to plan and pivot as needed, as well as ensuring the right product is at the right place, at the right time, so we can fill orders. For the customer, it’s seamless.”
U.S. Transportation Manager at GERBER
Addressing The Root Causes
As with most business decisions, there are short- and long-term options that will address the root causes of your logistics bottlenecks. Some will be quick and easy to implement, while others may take longer and be more resource-intensive, but all are worthy of your consideration in light of the potential impact on your business if left unchecked. Research shows that companies that integrate digital technologies into their supply chain can quickly improve service levels while cutting costs up to 30%**.
Tying It All Together
Mitigating bottlenecks requires you to spend time, attention, and energy trying to resolve them. Timely identification and proactively addressing bottlenecks will improve your organisation's bottom line. Find out what your supply chain can really do. Flexport can help you identify the bottlenecks you might have missed and provide the expert input you need to address the root causes.
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