Supply chain shifts: elastic logistics will define supply chains in 2024

Supply chains may be unpredictable now, but logistics firms have found an answer: elastic logistics. Being able to adapt to changing demand by shrinking or expanding as needed makes operations more efficient and ultimately saves money.

Sounds easy, but with supply chains more complex than ever and disruptions from issues such as raw material shortages, can elastic logistics become a reality everywhere?

“Worrying about getting products where they need to be on time is what keeps a lot of supply chain managers awake at night," HERE Product Marketing Manager Bjarne Jensen told HERE360. “Visibility and having strong partnerships are important ways of tackling this."

Elastic fantastic

Visibility and partnerships are only the start. According to Jensen, the more you know about the whereabouts of your goods and assets, the easier it becomes to react quickly to changes.

“That is not only within the supply chain itself," he said. “It is also informing other stakeholders, whether that is customers, partners or third-party companies."

Nearshoring, or getting supplies from closer to home, can help avoid unnecessary delays. Jensen said another way of becoming more agile is by having more than one supplier, so you can still source the materials you need even if your Plan A provider is facing delays. Employing third-party providers can be a useful way of scaling up and down quickly. Leasing warehouses from third parties, for example, rather than owning everything you use, means you can reduce them or increase them as needed.

“These are the things that companies are not only looking into but actively doing now."

Of course, technology tools and applications are essential to make elastic logistics a reality. Automation, such as automated warehouse fulfillment, increases visibility and efficiency. Knowing how much stock you have at any one time and where it is can help you move it in line with market fluctuations.

Visibility through digitization also helps the right people and resources to be available in the right positions in a warehouse, yard or dock to load and unload at the right moment, saving time and thus money.

Data, he said, is “invaluable" as a way of understanding peaks and troughs, such as the holiday season in November and December in Europe and North America. Looking at what happened in previous years can help you to predict when things will be busy.

“However, you still need to build in some safety nets into your supply chain so that you can respond to any unforeseen events," he said.

Running efficient logistics is often about making small gains that add up. For example, if a company is using robotics to make order picking and loading more efficient, a minute saved from a typical load soon adds up over time to substantial savings.

All of that adds up to a scenario where operations can be scaled up and down as needed, changes in demand can be forecast where appropriate, and reactions to unpredictable events can be much faster.

Case study: Active Logistics for Koch International

Active Logistics, a HERE Partner, helped European logistics company Koch International speed up its tour planning process by 80%. By automating this function, through a solution called Active Smart Tour, a task that used to take employees six hours which had to be done overnight can now be done in just one hour. Not only has that freed up workers for more meaningful tasks, but Koch International reports a 6% improvement in customer satisfaction.

“They have also improved the loading and unloading process," Jensen said. “Now, goods are stacked in the right order, so the right products are ready at the front of the truck for each delivery stop, saving time and improving productivity." The average stops they make per tour have increased from 14 to 16 as a result.

When you consider that Koch International makes up to 2,000 deliveries of large consumer goods daily, those gains add up to something significant over time. It is a great example of how technology and automation in particular can improve efficiency, drive visibility and bring supply chains closer to the ideal of elastic logistics.