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Logistics Providers Under Pressure to Meet Customer Expectations and Manage Costs


E-commerce saw a boom during the year 2020 that stretched supply chains to the maximum capacity. Customers not only prefer to shop online, but they also expect a smooth and quick experience from brands. A single bad experience, such as very late delivery, can mean brands lose a loyal customer.

Research suggests that the trend for online shopping will carry on over to the year 2021, and this year will see an even greater boom in online sales. Customer expectations are also ever-increasing, with many people expecting same day deliveries.

Logistics service providers are now pressed to meet these expectations (or risk losing business to others who meet them) while also keeping down operations costs. A survey found that manufacturers, retailers, and brands listed their number one business goal as reducing logistics costs. Logistics Service Providers (LSPS) also said that their customers wanted reduced fees for their services.

Along with the demand for reduced costs, LSPs said that their customers also have better service requirements. Brands, retailers, and manufacturers see service requirements as the biggest logistics planning challenge in the near future. They also see the need for automated warehouses and addressing infrastructure problems as an important consideration for improving logistics in the future.

Brands and manufacturers note that capable planning systems are not in place, contributing to operations costs. Systems lack integration with other systems, and there is also the need for automating system optimization. The lack of integration between fleets that are inbound and outbound is the biggest logistics planning challenge; it can help meet service requirements and avoid costly penalties.

LSPs also note that their customers had significant troubles related to forecasting and visibility, showing that much needed to be done to make supply chains responsive and efficient.

There is a need for investment to save businesses from future losses. This need clashes with businesses’ need to control costs.

Time sensitivity has become a competitive advantage in the e-commerce domain, and with huge brands providing fast-paced, quality services, businesses are forced to keep up or lose customers. It is expected that when the retail industry and the supporting logistics services are put under pressure, many will choose to form alliances to increase supply chain capacity and efficiency. Businesses will have to automate processes and downsize the workforce to keep up with increased costs.


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