Managing your logistics in-house can be a tempting idea. However, it is important to know the challenges and paint points that your firm can face if you decide to go this route. From unwritten knowledge and communication issues to lack of standardization and complicated regulations, logistics can be a tough prospect without expert experience. This article covers those challenges and how a managed logistics partner can alleviate them for you.

Colloquial Knowledge

Supply chain is heavily dependent on information that lives in peoples’ heads. This is because of the deregulated nature of the industry and the fact that new things can always happen. Very little of this is information is written down, and it is based on years of experience. This makes it challenging for teams that are unfamiliar with the nuances of the logistics world.

Common Knowledge Issues:

Knowledge of markets: Experienced logistics professionals are familiar with capacity challenges that affect certain regions, seasons, and types of freight. Information like this is not easily available to the average person.

Handling issues: Issues are inevitable from time to time in the logistics world. Seasoned supply chain professionals know how to navigate them quickly while protecting their own and their customer’s interests. Unfamiliarity with handling sudden issues can cost you money, time, stress, and even land you in legal trouble.

Communication

A single shipment can have as many as six or more parties involved. This can include the customer, the shipper, the receiver, the carrier, the broker, and more. With so many parties involved, communication becomes a challenge. If a single stakeholder fails to communicate important information, costs can rise, time gets wasted, and customers get upset.

Common Communciation Issues:

Bad contact information: A smooth shipment can quickly go south when one of the parties involved can’t be contacted. This can arise when outdated phone numbers and/or email addresses are given. This can lead to a failure to communicate changes, shipping/receiving procedures, and a slew of other problems.

Lack of tracking: When carriers don’t answer the phone and real-time updates are not provided, shipments get delayed. Delayed shipments always result in disappointed customers.

Regulations

Regulations and laws change constantly in the logistics world; staying on top of them can be difficult. From federal to state laws, there are hundreds to be aware of. This can be overwhelming for someone who is unfamiliar with the industry and can cost them time and lead to legal troubles.

Common Regulation Issues:

Documentation complexity: Shipments require certain legal documents that must state specific information. Incomplete or improperly prepared documents can lead to delays, increased costs, and rejected freight.

Carrier regulations: Carriers must adhere to certain standards in order to move freight. Booking a shipment with a carrier who is out of compliance can lead to massive delays and headaches. A recent example of this is the passing of driver English proficiency laws.

Scalability

Demand is a fluctuating entity. While seasonality stays about the same each year, local, international, and economic changes can massively impact demand for freight. Because of this, it can be difficult to quickly scale logistics operations up or down in an efficient and affordable manner. A recent example of this is the conflict in Iran.

Common Scalability Issues:

National and international changes: From pandemics and wars to recessions and trends, demand can change completely in only a few weeks. A sudden increase or decrease can wreak havoc on unprepared operations.

Strong growth periods: Many small and medium sized firms struggle to keep up with periods of strong growth. Inability to efficiently handle growth can do damage to your bottom line and hurt your reputation with your customers.

Managing Costs

Rates fluctuate constantly, making cost difficult to control. Capacity and fuel prices change on a weekly basis and are very difficult to predict.

Common Cost Issues:

Sudden rate increases: Fuel prices can skyrocket over a single week. This can increase rates by over 50% in a relatively short amount of time.

Capacity changes: A sudden tightening of freight capacity can quickly drive rates up. For example, the passing of a new law can take drivers off the road, reducing the total number of carriers available.

Reactive Processes

Many logistics teams lag since they are constantly reacting to issues instead of getting ahead. Instead of focusing of growth, they are busy putting out fires. This can stall growth and burnout employees.

Common Reactive Process Issues:

Planning failures: When vital tasks like setting appointments and communicating with shippers and receivers don’t happen, issues can quickly spiral out of control. Scrambling to contact involved parties suddenly takes priority, taking attention away from growth, all while costs and delays rapidly increase.

Checking in: Despite the best efforts to automate problems with shipments, it is still a very human based industry. Checking in manually makes sure you are on top of issues before they have a chance to grow. Oftentimes, your customer will be completely unaware there was ever and issue, which is a good thing.

Lack of Standardization

With thousands of brokers, truckers, and other stakeholders, the logistics world has very little standardization. Rates, charges, times, equipment, and processes are often subject to negotiation and/or variation from party to party. This quickly becomes overwhelming to people who are not prepared.

Common Standardization Issues:

Carrier negotiations: When problems like delays arise, some carriers will accept unwritten industry standards, but others will try to negotiate. An example of this is a carrier negotiating compensation for additional work that is assigned after the load contract is signed.

Processes: Shippers and receivers all have their own processes. This can include appointments, check-in procedures, and carrier background checks among other things. Familiarity and proper planning can help to avoid delays, angry customers, and ballooning costs.

Let the Experts Handle It

As you can see, handling your logistics in-house can lead to a host of headaches. Spending your time worrying about communication issues, regulations, and constant cost management will keep your from growing your business and keeping your customers happy. We at New Light Enterprises stand by ready to help you through the logistics maze so you can focus on growing your business. Reach out today!