What are the significant challenges the logistics sector facing today?
The Logistic’s sector is having one of best business periods of all times. Many companies are earning top dollar; this sector is becoming crucial as never before, the prognosis for this sector is steady growth. Nevertheless, on the other hand, this creates many headaches, which need to be dealt with shortly. It’s not a secret that many Logistic’s companies were lagging in some business areas. And this was precisely the case why all of the issues raised, which we are going to talk about in this article. Nevertheless, record profits are made, but if companies will not pay attention to the issues above, this will limit future growth possibilities, which will affect the smaller companies the most.
So let’s go deeper into the most significant challenges every Logistic’s company faces and will be facing shortly.
Logistic’s first of all is a service business, and employees create services. Therefore employees shortage is one of the biggest problems every Logistics company faces, which will snowball to the future periods.
Already today, there is a considerable lack of truck drivers, operational and sales personnel. And this problem will only go more profound, because of the technologies, you will start competing with every company in the world, as pandemics showed to all of us, that job functions can be done from anywhere in the world.
Furthermore, if earlier Logistic’s companies were attracting employes with bigger then average salaries, today other sectors have reached or overcome this salary level.
It’s essential to underly a new tendency that more and more young employees choose to do business by themselves because it’s super easy to do this now. It will limit the availability of employees even more.
And I do not see any effective measures for this issue in the not-so-far future. Supply Chain Services bureau is a big believer that automatization, robotization, and 3 D printing (as this will lower the need for Logistic’s services) will solve some of those issues. Still, until those technologies mature, we will need at least five years, and this will deepen the wound in the short term, as entirely different kinds of employees will be needed to manage those technologies. So proactive Logistics companies need to think about this issue today and find ways to handle it.
Again, you need not forget that now you are competing for employees globally, and companies from developed countries and more prominent companies can pay more.
It’s not a secret that jobs in the Logistics sector are not so attractive compared to jobs in global service center’s or startups. Because a job in logistics is usually related to long working hours and stressful situations, you will rarely see PlayStation stations or other relaxation spot’s in a logistic company. Moreover, there is a massive lack of modern thinking C suite leaders in this arena, which is crucial working and employing new generations
I’ve noticed that many Logistic’s companies are dependant on loyal employees, staying with the company for a long run, some of them even near retirement. Therefore I have some doubt’s that those companies will be able to find a replacement. And on the other hand, many companies have formed younger generation groups, those companies develop this talent, which later moves to work for other companies.
Companies that want to sustain healthy employee churn rates need to develop attractive working spaces and conditions, invest in their employees, create work environments where they could evolve and be involved in companies’ management.
The biggest companies are already today implementing some internship programs, are employing students. SME’s could start using out some more unconventional methods our outsourcing some parts of their business processes. This should become a plan for other small and medium companies, as a business without continuity is destined to fail.
Ability to create extraordinary services for your customers and third-party providers
Most of the time, Logistic’s business (especially the forwarding business side) is considered as a low marginal transactional business, where a higher price is a deal-breaker. Of course, price is an essential factor, but this is changing fast, especially during the pandemics. Many companies have seen that lower price is not always better. I’m confident that this trend will be seen in the post pandemics world as well. Companies that want to use this trend need to move from the transactional business model to the value creation model. Moreover, I believe this is the best time to do this, as the market I ready to pay a more significant price for better quality.
How to achieve this?
By creating extraordinary services for your customers and partners.
I’ve noticed that many logistic’s companies believe that their services begin to form the basic service: Load picks up, good arrives at the warehouse, etc. But companies that want to create extraordinary services must pay attention to the whole customer’s journey map: information about your company until the loyalty stage. If you want to create extraordinary services, you need to be perceived as the better option than your competition at each customer’s journey stage.
I notice one fact that Logistic’s companies tend to forget that their services are sold and bought as well and that to retain a customer by increasing loyalty is cheaper than finding a new customer. That’s why it’s essential to concentrate not only on the service part but also to pay attention to pre-and post-service parts.
New effective process creation
There are still many logistic’s companies that do their operations with excel sheets. Without business processes, it’s not only hard to grow your company, but the process creates clear guidelines for your employees as well.
Please understand me; I do not talk about those ancient times when employees were drawn to some strict procedures; no, of course, I’m talking about clear rules.
Processes are essential because you can automate many repetitive tasks (this also solves qualified labor shortage issues).
And of course, we need not forget that measurable processes increase the quality of your services, decrease error rates, and stipulates constant improvement culture.
Sustainability is not a new topic. Although, in the Logistic’s sector it started to gain importance only from the year 2020. There are good examples in this field, but there is still a lack of apparent regularity. Of course, new, more sustainable trucks are being developed, but we need to understand that this is a broader topic when we talk about sustainability. Truly concerned environmental companies need to underline it’s CO2 emissions to each driven kilometer and have a clear path hot to reduce it. And the non-asset-based providers need to look at other sustainable ways of doing business (Like using solar energy, reusing paper, reducing water waste, etc.).
Thank you for reading.
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