Managing a business, keeping it functioning at its best, and leading logistics optimization are no easy achievements. There are so many departments, activities, actions, and processes to oversee. From customer satisfaction and employee management to operations and fleet management and many more, logistics managers certainly have more than a handful of things to monitor on a daily basis.

While varying organizations and logistics businesses have different measurements of what the optimum level is, there are some standard things that all such companies should keep in mind. There are also some common challenges that companies in logistics face; challenges that affect operations and productivity.

You could find that your business faces one or more of these challenges, in which case you’ll definitely want to know how to address them and target optimization. We’ll take a look at these common industry challenges below. We will also review how you can utilize a Transportation Management System (TMS) to solve the challenges and never have to worry about your logistics performance again.

 What is logistics optimization?

What are the challenges to logistics optimization?

How can a TMS solve logistics problems?

Tips for logistics optimization

Important & must-have TMS features

Takeaways

What is logistics optimization?

It sounds like a bit of fluffy jargon, but this term refers to some important areas of your business operations. It can refer to your business’ performance, your productivity, the effectiveness of your operations, the quality of your service or activities, and more.

Essentially, logistics optimization is about making your supply chain management more efficient in a way that makes data and information more accessible and easy to trace. Through logistics optimization, organizations also aim to decrease waste and reduce costs.

In order to understand the best way to approach logistics optimization for you, let’s first take a look at some of the common challenges that logistics companies encounter.

What are the challenges to logistics optimization?

These are eight of the most common difficulties faced by companies that work with logistics.

Fuel/gas costs

The cost of fuel or gas forms a substantial part of logistics expenses. Transportation companies struggle to manage fluctuating fuel prices. With constant changes in fuel prices, this can be a difficult area to manage. The challenge to logistics organizations is to manage fuel waste by overseeing the implementation of fuel-conscious practices and planning expenditure.

Operational costs

Fuel is only one cost in the greater budget of the organization. Your fleet requires a range of expenses to function at its peak. You need to check and maintain your vehicles and you have to pay your drivers and other employees. In addition to this, you need to consider the cost of external actors like your suppliers and software solution providers. As with fuel expense management, you also need to consider ways to reduce wasteful behavior in your operations.

Customer service & satisfaction

Customer expectations are constantly changing. Various conditions – political, social, economic, technological, and more – can influence the demands that customers have for services and products. In particular, we have seen an immense shift in customer perspectives and expectations from deliveries and logistics. 

Customers want delivery visibility and transparency through real-time updates, vehicle tracking, and faster shipping options. This places pressure on logistics and supply chain systems to meet these demands and expectations. Thus, the logistics industry faces challenges related to improved customer experiences and better service delivery.

Economic & socio-political conditions

Economic, social, and political factors have a direct impact on elements like employee activity and compensation, transportation costs, and more. Factors like inflation, social unrest, global crises like the Coronavirus pandemic, and more, can influence industry regulations, customer demand, performance capacity, etc.

Thus, there is the primary challenge caused by the economic and/or socio-political situation, and there are the consequent conditions stemming from the primary issue.

Environmental challenges

Environmental challenges and the global call for reduced waste and eco-conscious industry operations impose demands on company behavior, actions, and values. Regulations governing emission reductions present a challenge for organizations to comply legally. Environmental issues also shape customer expectations, with customers seeking carbon-neutral delivery services. There are also costs related to compliance that logistics companies now need to consider.

Business process management

Not only should your business monitor advancements and changes in the economic, socio-political, technological, and environmental climates. You should also track trends in business process management. Consider process improvement approaches that can enhance your operations, including truck driver management and fleet management techniques.

With advancements in technology, in particular, you can integrate new software and digital tools into your processes and policies. However, it’s difficult to discern which specific tools and techniques to use and which will not suit your business. Keeping track of these developments is another arduous task.

Driver shortages

There are extreme shortages in the trucking industry, which are continually increasing. These shortages pose challenges to the ability of the organizations to achieve logistics optimization and point to internal issues like high and overwhelming workload, employee retention issues, and more. External factors such as the ones listed above also have an impact on driver availability.

These shortages also exacerbate other challenges like “poor efficiency, longer delivery times, more delays, and inability to meet customer expectations.”

Technological changes

You can see the impact and use of technological systems and techniques in the operations of most logistics organizations. While the logistics industry generally embraces the use of new technologies to improve logistics optimization, adopting these technologies comes with a few challenges.

For one, the cost of these technologies affects business budgets. Keeping track of new technologies is another challenge and adds pressure on business systems. Finally, implementing the technology effectively can be quite difficult as you need to introduce it to all relevant employees and pay the implementation and maintenance expenses.

Government & compliance regulations

The last challenge to consider is the government and compliance regulations placed upon the logistics industry. These regulations can vary from country to country, while there are others that come from global boards or entities like the United Nations. Logistics carriers face many compliance challenges on different levels.

These challenges can be further exacerbated if an organization doesn’t use systems and structures that promote optimizing operations. A Transportation Management System (TMS) is one such structure. Here are some of the ways in which a TMS can help you address the issues that affect logistics optimization.

tms for logistics challenges

How can a TMS solve logistics problems?

Below are some of the benefits of using a TMS for your logistics optimization.

Track drivers in real-time

With GPS features in your TMS, you can track your drivers and vehicles in real-time. This live-tracking opportunity makes driver management easier. You gain visibility into your deliveries in a way you cannot without the system. It allows you to observe whether drivers follow allocated routes, identify how far drivers are from their delivery destinations, and more. What this visibility grants you is the ability to monitor driver performances, improve scheduling, and help drivers improve their delivery strategy.

On the other side of the real-time tracking benefits, your customers can use the track and trace feature too. They can pinpoint exactly where their delivery is so they can plan their time accordingly.

Improve other business processes

There are various business processes that intersect for logistics success. Your order, warehouse, and inventory management, accounting departments, and others must all work together. Overseeing all these different parts can become extremely difficult.

API integration in a transport software solution helps you by combining tools used in different departments. For example, you can integrate your order management software into your TMS. That way the system can automatically check orders and manage them accordingly.

A TMS streamlines management processes and helps you manage them in a simpler way. As it also automates tasks, it further increases productivity and makes it easier for you to focus on the things that really need your attention.

Save time

Automation prevents employees from spending time on repetitive tasks. Instead, your TMS automates these tasks and frees up their time to do more work. Furthermore, the route planning abilities of this system help cut down on driving time for faster trips.

Save money

A good TMS can help your business reduce freight or fleet expenses in several ways. The system uses route optimization and planning to shorten routes and choose the best and fastest routes for your drivers’ journeys.

For each driving trip, a transport system can also manage the load in each vehicle. It will choose the most appropriate vehicle in your fleet and allocate suitable packages to it. By analyzing the dimensions of the packages against the capacity of the vehicle, it can maximize the number of packages loaded into one vehicle. By maximizing the load on a trip, your business saves money as drivers don’t have to travel back and forth to pick up single packages.

You can also use the data aspect of a TMS for logistics optimization, helping you cut costs and manage your workflow and team more efficiently.

Improve deliveries and customer service

Shorter and faster trips, more accurate ETAs, and better-performing drivers all contribute to the creation of a customer-centric delivery experience. When your TMS helps you better manage different aspects of your supply chain, it allows you to meet customer demands and expectations. You can improve your order and inventory management as well, which ensures that customers always get the correct order at the right time.

Other tips for logistics optimization

There are other things that your business can do to support your TMS. For one, you can try to limit the number of delivery options your business offers. Having too many delivery options for customers to choose from can complicate delivery processes. Rather stick to fewer options than offer all of them.

Another optimization tip to keep in mind is that your business operates in a greater market. This makes it important for you to keep tabs on logistics trends and the behavior of your competitors. Research and see how they manage their operations, learning from the successes and their flaws – like this lesson from Uber Eats.

The last tip to consider – and you may be already doing this – is to create and sustain valuable business partnerships. Suppliers, distributors, and other important supply chain actors play a vital role in your business’s success. Make sure to nurture these relationships, always.

Important & must-have TMS features

To reap the benefits above, these are the basic features that your TMS software should have.

These features assist you with different processes in your logistics. You can plan your routes and driver schedules. You can also track performance data on ongoing trips, record the data, and use analytics to better plan your operations in the future. This helps you manage and maintain quality logistics performance.

In addition to planning and management, your TMS can help you oversee the execution of trips. With GPS tracking, you get real-time control over your drivers’ activities, making sure they follow planned routes. 

You can also use the communication systems embedded in your TMS to improve connectivity and update drivers and customers on the delivery progress. Furthermore, it should make order management and the management of other areas of the delivery process easier to keep track of through integration capabilities.

Finally, your TMS can automate post-trip administration like reporting and document sharing, so that your employees don’t have to do it manually.

Takeaways

There are many approaches to optimizing your logistics. Finding the right one for your business requires insight, research, and the perfect transport management solution. With Track-POD’s TMS, you can cut costs, save time, manage your drivers better, increase productivity, and improve your process management. All of this allows you to get the best out of your fleet, drivers, and other employees so you can provide a premium service.

There’s nothing better than a TMS to make your logistics optimization easier.