Consumer demands increased as supply chain management topics like global sourcing and expanded areas of distribution became more complicated than ever. Global supply chain disruptions more than tripled1 from 2019 to 2021. Most of the companies were unable to cope these changes, some of them tried to patch the supply chains. The just in time production which lasted half of the last century won´t hold up the demands of modern commerce.
But how can you get out of this misery?
We present you 4 future proof logistics solution that pick up the current situation and its issues:
1. Raise inventory
Holding more inventory is one solution to battle the circumstances that happen around us, deviations that occur without us having the power to change them. More stock makes it easier to fulfil customer needs but this does not mean to get into the area of overstocking. It means to raise the number of bestsellers in coordination of available storage space in the warehouses without falling into the trap of inadequate capital lockup.
2. Expand sourcing partners
Sourcing from more than one or two partners becomes more important than before. To maintain resilience within the supply chain, the essential aspect of available products and focusing on a broad fundament that is built of many little columns instead of one big column as a supplier. Another option could also be to look for suppliers that are closer to your area.
3. Return rates optimization
Compared to retail. E-commerce return rate is around 20-30%² whereas in-store purchases only 8-10%. Fewer returns mean less costs for the company and less work regarding inventory management. To achieve this, customers need to know what they are going the receive at the moment of purchase. So detailed product descriptions, 3d models, augmented reality help to set the right customer expectations and lower return rates.
4. Bring your supply chain management on step forward into digitalization
Digitizing manual processes within the supply chain as a key fact leads to a better insight in the current processes. Scanning apps, inventory management software, machine learning to the point of artificial intelligence based solutions . Insight into the deeper stages of supply chain networks will help companies to identify deviations and demand at an early stage. AI-based solutions are available and according to McKinsey help companies to improve logistics costs by 15%³ and inventory levels by 35%. Service levels can be increased by 65%, compared to competitors.