No one knows what a city may bring every morning. A usually jammed avenue can be an empty and fast road from one day to the next. That’s why adaptability is a crucial ingredient of supply chain management.
There are countless different factors that affect the logistics business. Many of them can be foreseen and avoided through strategies and tactics, especially when we talk about the productive process, or at least they can supervise its performance to minimize their frequency.
But when the process goes to the city there is a mix of factors, challenges and problems that affects logistics management, from traffic jams (the average speed on rush hours in cities like São Paulo and Mexico City vary between 10 and 15 km/hour), routes restrictions (many cities have implemented several restrictions and even special taxes to enter downtown), or the sides effects that these involve, specially in route tracking, delivery checking etc.
Let’s take a look at those problems and challenges, related to daily operations in big cities.
Supplier delays. “Think purchasing & procurement and often what comes to mind is the struggle or battle to make a supplier give you materials or services for the lowest amount of money possible,” Cerasis explains.
How can we solve this? Cerasis stands that procurement’s new role needs to be focused on creating new relationships with suppliers and increase collaboration, in order to achieve a successful supplier relationship management.
Traffic. How to beat the city, then? Supply Chain Digital says that “small improvements will lead to big success (…) Optimization of every component of the supply chain is already an imperative to growth and success. A new microscopic level of optimization will further differentiate between competitors.”
“Predictive route planning and management solutions, intelligent storage and distribution space allocation software, as well as real-time integrated delivery tracking will become mainstream for both the biggest and the smallest companies,” they add.
Clients are more demanding. “The days of making supply decisions solely based on cost are long gone –Forbes explains-. Today’s consumers want to ensure the products they purchase are safe, of high quality and responsibly sourced. This is specially true in the food service industry, which has seen a massive movement away from low-cost offerings to healthier alternatives. Beyond quality, food safety and handling is expected to be front-and-center in 2016.”
Slow growth. “After peaking late in the last decade, global trade as a percentage of global GDP will continue trending downward. As cross-border trade growth slows, supply chain organizations will be forced to adjust from proliferation to optimization of international flows,” Supply Chain Brain stands.
“Shippers will evaluate global sourcing options more carefully and more comprehensively, manage the risks involved. Gartner estimates that 60 percent of current multinational manufacturers will organize to manage logistics globally in order to gain economies of scale, visibility and manage risks associated with volatility in currency exchange rates, taxes and margins.”
Tighter border controls. Logistics Management explains that “in response to the rapidly increasing pressure of migrants and refugees coming into Europe in the last years, a number of countries have re-established border controls.”
“This applies to Scandinavian countries such as Denmark and Sweden, the border between Austria and Germany, and countries along the Balkan route leading from the Greek-Macedonian border (…) The transport and logistics sector is now concerned that these temporary restrictions might usher in the return of Inner-European border checks—a move that could have serious consequences for the flow of goods and supply management.”
What other problems or challenges do you see in the logistic industry? We invite you to share your ideas and opinions.