You may be running a logistics business solely or as a department or an essential part of your company/business, whatever the case, the rule is the same and critical to maintaining.
The first rule in starting any business is not just having the idea but acquiring the knowledge and the right information for starting and running that business efficiently. Agree?
In the process of getting this knowledge, it’s imperative you know the likely pitfalls that accompany running that business. Now, we’re talking about the logistics industry. An industry that is ever-evolving and changing in its operations.
All around us, many logistics businesses have sprung up everywhere. But, many don’t last up to five years before they fizzle out. Why is that? It is because of some of the following reasons.
There are several reasons why a logistics business may not do well, but that’s a topic for another day. It doesn’t matter if you’re a startup logistics operator or you’re thinking about starting a logistics business, you’ll find this article helpful.
In this article, we’ll be sharing seven common mistakes logistics businesses make and how you can avoid them in order to thrive in all climates.
- Operational Wastefulness and Poor Cost Structure
- Failure to Capitalise on Market Opportunities
- Unclear Corporate Goals
- Not Leveraging Emerging Technology
- Merging Fast Pickup Areas and Bulk Storage
- Lack of Transparency
- Taking Existing Customers for Granted
- BONUS POINT: Poor Packaging
Let’s get started.
Operational Wastefulness and Poor Cost Structure
Have clear strategies to minimize cost and eliminate waste. Avoid operational wastefulness and don’t lose control of cost structure. Keep costs well measured and calculated. Often, logistics costs are determined by product cost which is based on variables such as weight, speed, distance, and location.
It is important that every logistics business is able to measure its growth. Use a Forecasting tool to help you calculate the stock cost.
Avoid assuming cost or estimating cost. The best way to go about this is accurately calculating cost before determining the logistics cost.
Failure to Capitalise on Market Opportunities
As a logistics business owner, you must stay informed and aware of market trends, competitors’ strategies, and customer’s growing needs and expectations. Inability to be abreast and equipped with the necessary data could hurt your logistics operations/business.
The Covid19 pandemic brought several changes in the world including in the logistics market. However, E-commerce, health/pharmaceuticals, and daily goods industries have seen an increase in demand. And what this means for a logistics company is that there’s a positive market to capitalize on and boost revenue especially in the area of last-mile delivery services.
Statistics shared by Allied Market Research show that the global logistics market size is expected to reach $12,975.64 billion by 2027, growing at a CAGR of 6.5% from 2020 to 2027.
Taking advantage of various opportunities that exist in the market today, is the ticket you need to scale your business. Don’t be among those logistics service providers that waste such opportunities.
Have short-term and long-term opportunities and market goals.
Unclear Corporate Goals
One problem faced by logistics firms is their failure to communicate their goals to staff. While many logistics businesses have no clearly defined corporate goals. Your corporate goals give you a focus and help you properly measure your performance based on that.
Corporate goals must be clearly defined, communicated to staff, and be measurable. Decisions and actions of staff and the entire company must be in line with the stated goals, and strategies to adopt for the fulfillment of the corporate goals should be communicated.
Not Leveraging Emerging Technology
Some logistics business still run their business using old technology or manual means. This slows their performance and hampers their growth.
Technology is ever-advancing and logistics tools that make delivery, logistics, and supply chain operations faster and smoother keep emerging. You must leverage these technologies if you want to run an efficient logistics business.
Technology helps you keep track of orders, goods in transit, and inventory. There are Warehouse Management Systems (WMS), Supply Chain Management tools, and tracking tools that can ease your job by minimizing errors and costs.
Adopting automation gives you a chance to earn more and improves customers’ experience. Adopting technology gives you an edge over other logistics operators who are not using these tools. You minimize loss as well.
Merging Fast Pickup Areas and Bulk Storage
Many logistics operators make the mistake of putting fast-moving goods in the same area as bulk quantities. Easy mobility should be your target as an operator. Your fast pick area should be separate from your bulk storage area in your warehouse. This way, you can easily search and pick up products that are urgently needed.
Lack of Transparency
There must be transparency in decision-making, performance, and operations. The company’s objectives must be clear and followed. If you’re not transparent in your dealings and activities, your staff and even customers will not trust you or find you reliable.
Taking Existing Customers for Granted
When there’s lower demand, do not assume your customers are going to stick with you just like that. In whatever economic situation your business finds itself, always do everything necessary to meet your customers’ needs and expectations.
Taking your existing customers for granted especially in times of lower demand is shooting yourself in the foot. Remember you have several competitors and your customers can easily switch to the next company. Build customer loyalty and learn strategies to maintain this loyalty.
BONUS POINT: Poor Packaging
Packaging goes a long way in showing you off as a professional and competent or incompetent logistics/last-mile delivery service provider. Ensure the products you’re delivering are well packaged and in a safe condition when it gets to its destination. This will also build trust and loyalty in your customers.
The logistics industry is a huge and highly lucrative industry. If you apply the right principles and methods discussed here, you’re well on your way to thriving in this sector. Always be up to date with trends in the industry, research your customers’ needs and ensure to go beyond expectations in your delivery and operations.
Now, where are you stuck in your logistics business? Discuss with us below.
If you need further knowledge and mentorship support in running a successful logistics business, CLMI offers professional training and certificate in Courier and Logistics Management, Fleet Management, and more. Check out our courses today and give us a call for further inquiry to enroll in one.