Logistics Management

Consumer Demand Drives Innovative Logistics Management

The way that people shop, what they’re shopping for, and what they expect from their shopping experiences has evolved a lot over the past several years. The shift in consumer demand drives changes in the supply chain and in logistics management.

How Has Consumer Demand Changed?

Increased Online Sales
Online sales are still on the rise. In 2018, online sales rose more than 14%, accounting for nearly 10% of all retail sales. Based on trends from the past several years, it’s highly likely that the shift to online sales from the more traditional brick and mortar retail model will continue.

Insistence on Lightning Fast Shipping
A decade ago, people could expect something they purchased online, by phone, or through the mail that would have to ship to their home to take a week or two, sometimes up to a month. Now, Amazon’s two-day shipping, introduced in 2005, has led other retailers to find a way to offer delivery that’s just as fast.

Now, two-day shipping is almost the norm. This has led to consumers avoiding products that they can’t get in just a few short days.

High Demand for Personalization
Not only do people expect to buy things and get them quick, they also expect to have access to the exact product they’re imagining. Personalization has become more standard than premium since customers expect unlimited options which means more SKUs to deal with in warehouses the world over.

Changes in Logistics Management
How has logistics changed in order to adapt to the shift in consumer demands? Here are several changes we’ve seen.

More Reactive Logistics
Logistics have become far more reactive with the advent of personalization combined with super-fast shipping. It means that the gathering of data, projections, ordering, manufacturing, and shipping must occur much more quickly and accurately than they used to.

New Technologies
In order to support this more reactive logistics model, many new technologies have been developed and implemented. Some of those include software programs that help develop more accurate projections, AI and IoT implementations, and robotics that help fill orders.

The Evolution of New Logistics Models
3PL and e-commerce fulfillment are becoming a big part of the logistics industry as supply chains are realizing that it’s not always most effective to handle all of their logistics needs in-house.

It’s Complicated
More complicated logistics models mean that logistics managers have their work cut out for them. A more intensive knowledge of logistics is necessary for managers in today’s fast-paced supply chains.

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Independent research shows that improved supply chain management can yield:

  • 25 – 50% reduction in total supply chain costs
  • 25 – 60% reduction in inventory holding
  • 25 – 80% increase in forecast accuracy
  • 30 – 50% improvement in order-fulfillment cycle time
  • 20% increase in after-tax free cash flows
  • Supply Chain Mapping

  • Review Market Conditions

  • Determine Operational Inefficiencies

  • Outline Opportunities

  • Implement Changes

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