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The Top 5 Logistics Mistakes SMBs Make and How to Avoid Them

Read on to know how logistics mistakes can be avoided

By William PowellPublished about a year ago 4 min read
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In the modern marketplace, small- and medium-sized businesses have many different things to balance and factors to consider. With increasing demands of businesses, complicated freight systems, and ever-changing infrastructure needs, it is easy for an SMB to let some aspects of their business fall through the cracks. With careful organization and attention to detail, however, these 5 Logistics Mistakes can be avoided or rectified with minimal difficulty.

Poor Stock Planning

Usually kept in warehouses, stock planning is incredibly important for smooth and efficient commerce. Too much stock kept in a warehouse leads to rising costs of warehousing as large quantities of products are held, without generating any profit. After all, the product being sold is what generates the profit, and sitting on the warehouse floor only leads to businesses paying the warehouse for floor estate and lighting.

Conversely, too little stock leads to a business selling out of their product, losing potential profits from sold goods and loss of future business. Poor stock planning is a simple issue to avoid, with careful sales forecasting based on the sales of previous months and seasons. Additionally, implementing an inventory planning system to manage the stock flow and turnaround time for suppliers limits over- or under-stocking, reducing wasted warehousing costs and loss of business.

Inefficient Warehouse Organization

The organization of warehouse goods is paramount to the efficiency of a business. Organizing warehouses according to unnecessarily detailed groupings or overly-generic listings leads to wasted time for packers, and loss of product as warehouse workers are unable to find the goods they are looking for.

Using reasonably detailed organization according to your business needs, as well as visual communication for warehouse workers makes it easier for warehouse workers to find the product needed, and helps to maintain easy-to-access product lists for a business. Additionally, using Warehouse Management Systems (WMSs) can help to streamline warehousing and distribution, leading to less time wasted, and in turn, lower costs and losses for an SMB.

Ineffective Picking and Packing Methods

Picking and Packing for an SMB refers to the preparation of warehouse orders. The collection of goods into packages, the size and weight of these packages, and the methods of freight transportation all play into picking and packing methods.

As the most labor-intensive activity in the warehouse, making sure these methods are efficient and well-designed for the purpose of the business ensures less wasted time and costs from transportation, leading to higher profits and growth for an SMB.

Businesses should consider the different picking methodologies that best serve their warehouse, such as single-order picking, multi-order picking, or batch picking which focuses on only one order before moving on to others. There are also many ways to reduce costs with picking and packing methods, such as lighter product packaging (like using aluminum or styrofoam) or mobile device-assisted packing, which will in turn lead to a more efficient and organized business.

Using Only Single-Carrier Freight Systems

Freight systems are incredibly important tools when it comes to the logistics of commerce. As the world of business becomes more technologically-minded and computerized, many freight companies supply SMBs with freight management systems that function only with their carriers.

While single-carrier freight management systems have become the norm, they only create more potential breakpoints and bottlenecks in business, leading to (again) wasted time and costs.

Single-carrier freight management also results in fragmented data systems, which are prone to loss and failure as large data sets are spread throughout several different freight systems.

Further, business personnel are affected as more training is required for new carriers and freight management systems.

As one of the business’ largest-cost processes, SMBs should consider using a multi-carrier freight system, which will result in less required training, a single source of information for all freight carriers, and fewer potential breakpoints and stoppages due to the disorganization of freight systems.

Multi-carrier freight systems also avoid inefficiencies in data reporting and performance measurements, limiting potential process and organization optimization, and in turn business growth.

Inability to Scale with Business Changes

As business is expected to be conducted quicker and quicker, small and medium-sized businesses may find themselves struggling to keep up. Using antiquated operation methods and inefficient packing standards may save time and money in the short-term, but could lead to unnecessary costs and confusion as more operations are demanded from a business.

Refusing to update standards for a growing business can compound many of the issues previously mentioned, creating a vicious cycle of losses, disorganization, and inherently limited growth speed as businesses struggle to keep up with the demands of their consumers.

To remedy this, businesses should pay close attention to the operations of their warehouses and operation methods, finding the places where inefficiencies are costing the business more than they are saving by maintaining a poorly-designed, outdated methodology. Implementing the previous solutions are only part of it, as every industry has its own unique needs and commercial bottlenecks.

All in all, modern commerce demands quite a lot from small- and medium-sized businesses. Computerization, competition for warehousing and freight, and stocking capabilities are only the tip of the iceberg when it comes to the challenges SMBs face in today’s marketplace. Optimizing and streamlining business practices can improve many aspects of trade and ensure steady and fast growth for a business.

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About the Creator

William Powell

William Powell is a writer and educator with a passion for marketing. He enjoys learning about the latest business trends and analyzing how global events impact domestic and international economies.

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