BLOG

The Hidden Costs of Running Supply Chain The Old Way

So, if you are complacent with your old techniques of executing supply chain and logistics operations, we have some bad news! Your traditional methods are leaking thousands of dollars in the guise of lost productivity, thefts, excess fuel consumption, unhappy customers, poor compliance and more.  

Old methods of running supply chain and logistics operations have inherent limitations when it comes to providing end-to-end visibility. Reason? These methods are driven by technologies that are gradually becoming outdated. They surely did well at their prime, but with evolving business demands and changing customer expectations, they simply don’t make the cut. 

Here are some major reasons why the hidden costs of running a supply chain and logistics the old way is killing your business. 

The Cost of Poor Visibility
According to a Statista report, 21% of supply chain professionals say that poor visibility is their biggest organizational challenge. It’s not surprising as poor visibility has been weighing down supply chain and logistics operations for decades and using primitive means of tracking delivery fleet can be blamed for it. 

Traditional tools of tracking fleet do not have the capability to provide real-time visibility of fleet location. Hence there is no way to understand if a driver takes unnecessary diversions and makes frequent stoppages. Poor visibility makes it extremely difficult to predict and address exceptions and causes loss of productivity, excess consumption of fuel and unnecessary delays. 

The Cost of Delayed Deliveries
Thanks to the likes of Amazon, same-day deliveries are becoming the new normal. According to Forbes Insights, 44% of businesses state that the Amazon effect is having a dramatic impact on their logistics, supply chain and transportation operations. 

Today, customers are even willing to pay extra to get parcels delivered early. Traditional methods of managing delivery fleet make it difficult to gain control over last-mile operations. These methods have inherent limitations when it comes to planning efficient and cost-effective routes. It also has limitations when it comes to optimizing routes in real-time. These results in prolonged delivery turn-around-time causing delays and businesses pay the price in the guise of customer churn. 

The Cost of Increasing Risks
According to reports, the average number of cargo theft incidents per month in the US is 54. Out of this, 61 percent of thefts occur at truck stops and official rest stops. Not only losses, theft and pilferage of goods causes significant damage to reputation, especially if it becomes a routine problem.

Traditional means of managing supply chain and logistics results in poor visibility of freight and without visibility, it’s difficult to predict and mitigate risks. When trucks halt at unscheduled locations for more than a desired duration, it can imply a possible situation of theft. But to understand such delays logistics stakeholders need to have in-transit visibility of freight. A study highlights that cargo theft is a $15 to $30 billion-dollar problem each year in the US. 

The Cost of Poor System Interoperability
Traditionally logistics systems have been known to operate in silos. This prevents logistics stakeholders to get a holistic view of ongoing operations. As there is very little interoperability between core logistics systems like ERPs, WMS, TMS, and 3PL systems, logistics stakeholders are forced to take decisions based on incomplete information. Poor system interoperability also makes managing KPIs and ensuring SLA adherence difficult.  

The Cost of Poor Scalability
The ability to scale delivery operations, especially during festive seasons, is critical for businesses. Traditional means have limitations when it comes to quickly outsource delivery tasks to third-party logistics providers. For instance, during Christmas, the demand for online food delivery suddenly shoots up. Restaurants with small delivery fleet find it extremely difficult to cater to increasing customer demands. Legacy logistics systems fail to quickly onboard third-party delivery executives based on proximity, cost, and urgency. This results in a massive loss of business opportunities. 

The Cost of Rigid Deliveries
Modern customers are demanding and to satisfy them delivery needs to be done on their terms. Traditional logistics systems fail to make deliveries flexible. These systems do not have any room to accommodate changes on the fly in case a customer decides to change the delivery location and time. This results in customers shifting to businesses that offer flexible delivery options.

To battle these costs, businesses need to leverage advanced logistics platform. These platforms are powered by disruptive technologies like machine learning, IoT, automation, predictive intelligence, and analytics. By embracing advanced logistics software, businesses can enhance route planning, predict delays, ensure accurate ETAs, reduce delivery TAT, customize deliveries, shrink the total cost of ownership and do much more.

FarEye’s data-driven logistics solution has empowered 100s of businesses across the world to reduce logistics costs, increase freight visibility, improve capacity planning and deliver delightful customer experiences. To know more you can sign-up for a quick demo here.