Top 6 Logistics Management Challenges And How to Overcome Them?
Behind every efficient supply chain, there is a logistics management system that has conquered its challenges
In today’s competitive business and trade market, logistics management seems to be highly challenging as there are several internal and external factors that disrupt the supply chain. In the article below, you can understand the logistics management challenges and smart solutions for them.
What Will We Cover?
Logistics management deals with the transport and storage of goods and services from the point of origin to the delivery point. The importance of logistics management is that it reduces overall transportation costs, enhances customer satisfaction, and maintains good brand reputation. A compelling logistics management software enhances smooth and cost-efficient supply chain management.
In the emerging business world, logistical challenges are the prime concern, thus they affect mainly the supply chain. Here, we will pinpoint the 6 most common logistical challenges that interrupt the smooth business functions. The solutions for logistical management challenges not only focus on solving issues after the supply chain breaks. But, it even enhances prior intimation about the challenges for efficient logistics management. Smart solutions handle these issues more effectively and are also time-saving.
Did you know? Due to the effective functions of supply chain management software, its demand is increasing globally. As per the report by Statista, the annual growth rate between 2025 to 2030 is expected to be 3.33% and attaining market volume US$24.70bn [1], by 2030.
Here you can explore the challenges faced by a logistics manager, which include a wide variety of issues, aligning with logistics management.
What Are The 6 Major Challenges in Logistics Management?
As we know, logistics seems to be a central function of business transactions; it also has notable challenges. The logistics managers have to be aware of the recent trends in logistics market conditions to overcome the challenges in logistics. The notable challenges include supply chain challenges, transportation delays, inventory management challenges, last-mile delivery problems, warehouse management issues, and fleet management challenges.
Understanding customers’ preferences and other natural uncertainties helps to overcome the high expenditure and improve supply chain performance.
1. Supply Chain Disruptions
The supply chain disruptions include macro-level issues that ceaselessly affect the on-time transportation, fleet maintenance, inventory management, and last-mile delivery. When intensely looking into supply chain challenges, we can find out that the unpredictable external factors pave the way for these disruptions. The external factors include geopolitical and economic instability, natural disasters, and demand spikes, and also most of them are beyond the control of mankind.
Geopolitical and Economic Instability:
Geopolitical instability involves trade conflicts and tariffs on goods and services between countries. As countries levy high taxes, restricting trade entry can create a diverse impact on the supply chain management. This reflects in high transportation costs and delayed deliveries.
Natural Disasters and Demand Spikes:
Natural disasters, including floods, earthquakes, storms, or pandemics, affect business functions. The transportation seems to be blocked or diverted due to the effects of natural events. It slows down the goods and services transactions.
At this instance, demands for the goods and services from the customers spike, and this in turn creates extra tensions on supply chains. This affects on-time delivery and makes it hard for businesses to handle the demands.
Solution: Enhance Supply Chain Resilience
Companies should implement a strategic plan to have more flexible and resilient supply chains. This can boost up to handle unexpected situations and have backup options. Supply Chain Management software can predict the challenges earlier and support taking immediate actions.
SCM software can track entire goods and service transactions, handle suppliers, and give prior indications about the demand accurately. It enhances real-time tracking of the goods and services from scratch to the delivery point.
2. Rising Transportation Costs And Delays
Transportation is the backbone of logistics. The transportation charges are proportional to the price of fuel. Due to the rapid increase in fuel prices, transportation charges are also increasing nowadays. Thus, it becomes an unavoidable challenge for logistics and results in delays of transportation, and rise of delivery charges, which also affects customer satisfaction.
Fuel Price Volatility:
The considerable increase in fuel prices is induced by global economic conditions, environmental factors, and political concerns. The increasing fluctuation in fuel prices volatility induces high transportation costs, shipping charges, and also results in limited marginal supplies.
Port and Route Disruptions:
Ports are considered the prime spot for global logistics, major shipments, and the exchange of goods and services accomplished through it. Political disputes between countries are reflected in congested transportation and lead to costlier delivery surges. This also causes limited service to people, missed deliveries, delayed deliveries, and an increase in warehouse costs.
Solution: Optimize Transportation and Distribution
Businesses have to set prerequisites for their logistics. The transportation management system (TMS) enables the logistics managers to track the shipments with real-time updates, optimized routes, and also suggests load planning. This prior engagement cuts down on high fuel consumption, reduces transportation costs, and also saves time. TMS supports limited transportation cost practices despite external uncertainties.
3. Fleet Management Challenges
Fleet management is very crucial for transporting goods.The rise in vehicle maintenance, service cost, costly spare parts and the huge demand for skilled drivers is becoming a leading challenge for many businesses. Let’s break down these key challenges in fleet management and how software can boost logistics performance.
Driver Shortages:
Skilled and experienced drivers ensure safe and on-time delivery. The fleet management challenges are due to the shortage and demand for experienced drivers. This leads to an increase in labor costs and improper vehicle maintenance. The unexpected fleet repair interrupts in timely delivery
Vehicle Maintenance Costs:
Fleet management challenges are becoming a prominent issue. Due to an increase in pricing of spare parts, fleet service charges, rising fuel prices, and advanced vehicle technologies.
Solutions: Streamline Fleet Management
The automation tools, telematics, and fleet management software can overcome these challenges effectively. Real-time updation of logistics, fleet health, and vehicle service remainders can be optimised through these tools. It prevents overall fleet management costs.
4. Inventory Management Challenges
Supply chain disruptions and transportation issues lead to inventory management challenges. This affects overstocking, stockouts, and inaccurate inventory data.
Overstocking and Stockouts:
Managing inventory level aligning with the demand seems to be hard. Overstocking accumulates warehouse space, increases stocking prices, and risks product obsolescence. On the other hand, stockouts reduce customer retention and brand reputation. Both stocking and overstocking affect logistics management.
Inaccurate Inventory Data:
Manual maintenance or an outdated system for inventory data sometimes leads to unexpected financial loss. This missed or unreliable inventory data disrupts logistics management.
Solution : Enhance Inventory Management
To enhance inventory management, the best solution that can be used is a Warehouse management software (WMS) , as it offers real-time updation of stock levels and indicates excess stocking. It optimizes stocking aligning with demands, and ensures low-cost efficiency for inventory management challenges.
5. Last Mile Delivery Problems
Last-mile delivery is crucial for all businesses as it can create an impact on customer satisfaction. Logistics face last-mile delivery difficulties in urban areas and real-time tracking of the product.
Urban Delivery Congestion:
Businesses face challenges with last-mile delivery problems in populated urban areas. Due to non-parking zones, limited access, and traffic congestion, last-mile delivery is inefficient and also expensive. This leads to more fuel consumption, slow and missed deliveries.
Real Time Tracking Demands:
In the latest trends, customers seek real-time tracking of their orders. Businesses without this robust tracking system may lose customer trust and may face more customer complaints.
Solution : Improve Last Mile Delivery
Businesses can tackle this challenge by adopting IoT-based tracking solutions. This enhances real-time visibility and optimizes the transportation routes. It supports reducing delivery delays and improving overall transport efficiency.
6. Environmental Concerns
The carbon emission regulations protocol induced green logistics. Businesses adapted green logistics to reduce the increasing carbon emissions.
Carbon Emission Regulations:
Businesses have to stick with carbon emission regulations to avoid heavy fines. The government strictly follows logistics to avoid carbon emissions to ensure environmental safety.
Reverse Logistics for Returns:
Customer expectations are increasing for reverse logistics for returns. This results in additional transportation charges and packing required. Businesses have to align with this requirement without emissions.
Solution : Adopt Green Logistics Practices
Eco-friendly packaging and transportation reduce carbon emissions. Optimising overall logistics management with the right tool enhances fuel efficiency and controls carbon emissions. Thus, adopting green logistics methods has risen up and maintains a good brand reputation.
Technology provides great support in managing the above-discussed logistical challenges. We have discussed below the 3 most suitable solutions for smoother logistics management.
How Does Next-Gen Technologies Address Logistical Challenges?
Next-Gen and advanced technologies have revolutionized the habitual logistical management process. Technologies address the difficulties by implementing AI in logistics, IoT, and cloud-based logistics software to enhance efficient logistic management.
AI Optimization
AI rebuilds the logistics operation from the initial step to the final destination efficiently and also saves time. It supports the logistics managers to make timely decisions and minimizes manual errors.
IoT For Real-Time Visibility
Internet of Things (IoT) enhances the logistics monitoring process with real-time updates, with transparency and control.
Cloud-Based Logistics Solutions
Cloud-based logistics solutions enable monitoring and accessing logistics data, and scalability with real-time updates. It encourages smooth collaborations with stakeholders and customers.
To Wrap Things Up
Logistics business often meets with above-discussed most common logistics management challenges. The demand for systemized and smooth management is increasing day by day. AI, IoT, and cloud-based logistics solutions pave the way to overcome these hurdles and enhance cost-efficient logistics functions.
TLDR – Key Takeaways:
Frequently Asked Questions (FAQs)
1. How to overcome common challenges in logistics management?
Aligning AI-integrated logistics solutions, IoT, and cloud-based logistics software helps to overcome the common challenges in logistics management.
2. How many types of logistics are there?
In SCM, there are 5 major types of logistics that are commonly considered, and they are inbound, outbound, reverse, third-party and fourth-party logistics.
3. What features of software help with logistics management?
The distinct features of logistics management software serve unique purposes. These are the key ones to look for: customized dashboard, fuel optimizer, route optimization, advanced search for nearby cheapest fuel stations, freight delivery schedule management, real-time operational updates, dispatch and trailer management, accurate fuel expense predictions, etc.
4. How many types of logistics software are there?
The logistics management software is classified into 10 types that serve unique functions effectively and enhance logistics operations cost-efficiently. The 10 types of logistics software are:
- 1. Warehouse Management Software (WMS)
- 2. Yard Management Software (YMS)
- 3. Order Management Software (OMS)
- 4. Labor Management Software
- 5. Transportation Management Software (TMS)
- 6. Trucking Dispatch Software
- 7. Fleet Management Software
- 8. Freight Forwarding Software
- 9. Route Optimization Software
- 10.Real-Time Tracking Software
5. Who are the service providers in logistics?
Businesses that manage the overall movement of the products and services are the service providers in logistics. The types of logistics service providers can be classified from first to tenth party (1PL to 10PL).
How Does iCommuneTech Solve Logistics Management Challenges?
We offer customized logistics management solutions that depend upon your business scale and the core requirements. iCommuneTech offers cost-efficient services that level up your logistics management by addressing the major challenges.
Are you excited to avail our solutions? Check out our high-accuracy performance in logistics management. Contact us for further details!
References
1. Statista – (Source)
Irshad Pathan
Web Development Expert
Irshad is a senior technical expert at iCommuneTech. He manages the iCommuneTech’s Web Development Team, and has hands-on expertise in web development, Laravel development, Logistics, fleet management, and Supply Chain Management. He mentors the in-house team and enjoys describing his experience in words.