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03 Oct 2021

Solutions for Retail Logistics Management

Moving goods from manufacturer to consumer is a long and involved process. On the surface, it may appear straightforward—package the product, ship it to a warehouse, send it on to the customer. However, it is important not to underestimate the importance of retail logistics. In reality, there are many steps involved in optimizing the travel time, shipping method, packaging, handling processes, and so on. The steps from manufacturer to consumer form a supply chain, and the general task of managing that chain is called logistics.

For example, logistics manages the transportation of coconuts from a Hawaiian farm to a grocery store in Montana. This involves several components, including freight, warehousing, and careful handling and scheduling to ensure the fruits don’t go bad before arrival. Logistics also handles the transportation of medical supplies from manufacturer to medical center, with cold-chain management for vaccines that must be kept below a certain temperature.

In retail, which is the selling of goods directly to consumers, supply chain logistics often operates through multiple channels, including online sales and in-store purchases. Therefore, retail logistics managers are responsible for directing resources to each channel in proportion to demand and organizing warehousing strategies, online order placement processing, bulk store deliveries, and so on.

In 2020, global retail sales totaled $23.36 trillion, accounting for over a quarter of global GDP. Annual e-retail sales have surpassed $3.53 trillion, and experts expect e-commerce to make up 22 percent of the global retail sales market by 2023. Indeed, logistics is vital in retail, has many functions, and can affect your bottom line. This article will help you understand the importance of retail logistics and its effect on your business.

Functions of the retail logistics system

Logistics software

Supply chain managers must keep track of every item in every part of the entire supply chain. Many different software products and digital supply chain tools exist to help manage and track all stages of each item’s journey.

Features of logistics software include the following:

  • Order management: This technology receives orders across all sales channels, fulfills them, and allows for tracking, invoicing, returns, and integration with shipping companies.

  • Inventory management: The tracking of each manufactured item from the time it enters the supply chain falls to inventory management. This feature enables decision-making as to where to stock and store merchandise. For example, if a certain product has low inventory at a distribution warehouse or retail store, this system can send notifications and trigger new shipments.

  • Warehouse management: Inside a warehouse or distribution center, there are many moving parts to the production logistics. Often electronic scanners, conveyors, and robots sort and direct the inventory using warehouse management software.

  • Transportation management: If your product needs to move from point A to point B, then you need a way to get it there. Transportation management software allows for transportation arrangements, including scheduling, special handling requirements, and even route optimization, through third-party providers.

  • Forecasting: Some tools can track trends and enable demand planning for different scenarios so that you can prepare and route resources as needed.

Logistics software is often capable of collecting all sorts of different types of data along the way. These data enable users to define metrics that measure efficiency, cost optimization, customer satisfaction, consumer habits, and more. This allows them to make informed changes to their overall logistics strategy for the better.

Main retail logistics system functions

Retail logistics systems help streamline the movement of items through the supply chain. These systems are what stock store shelves and allow for online purchases. The main functions of a retail logistics system are as follows:

  • Increase product variety in stores, hence allowing consumers to shop for multiple items in a centralized location. This enhances convenience for the consumer significantly and will enable producers to have their products reach more customers.

  • Hold goods at strategic stocking points to minimize the time between order placement and the items’ arrival at the customer’s doorstep. Fast order turnaround time improves customer satisfaction with retailers and drives sales.

  • Send the correct product to the correct customer or store by tracking all items carefully. Costs can go up significantly because of shipping errors and returns. Mistakes can also lead to loss of business for retailers.

  • Optimize order fulfillment for cost-effectiveness and efficiency. Because there are so many components to getting products from producer to consumer, there are many places to introduce errors, bottlenecks, and additional expense. By using logistics software and applying tested strategies, supply chain managers can minimize interruptions and expenses.

  • Ensure availability of necessary infrastructure, including warehouses and transportation. For the supply chain to function at all, there needs to be transportation, storage, and administration keeping it all running.

In essence, retail logistics systems function to get products from manufacturing centers to consumers as efficiently and strategically as possible. As such, they are fundamental to maintaining the overall economy, a topic covered in more detail in a later section.

What are the benefits of logistics for retail supply chains?

Among the many benefits of logistics in retail supply chains are the following:

  • Enhanced inventory management: By adding brains to the supply chain, inventory tracking becomes easier and more reliable. Retailers will know immediately when supply is low and have the ability to arrange restocking and redistribution of goods.

  • Reduced transit times: Route optimization tools and strategic location of inventory can reduce both overall transit time from producer to consumer and the time between customer order and delivery.

  • Supply chain optimization: Again, by adding a brain into the mix, it becomes possible to look at all parts of the supply chain, examine methods and procedures, and identify ways to streamline the process.

  • Improved supply chain visibility: With a brain comes the ability for introspection. Logistics software and tools allow retailers to see into every corner of their supply chain and identify where each inventory item is in the system.

  • Minimization of risk: By implementing logistic strategies, retailers minimize their overall risk. They can worry less about whether they can meet holiday demands or whether they’re going to mass ship the wrong item, creating a huge returns expense.

  • Competitive edge: All these items put together provide retailers with a competitive advantage. The ability to see, manage, control, and improve the process by which goods make it to the consumer leads to increased agility, decreased costs, and the ability to meet consumer demands.

In addition to all these advantages, logistics can directly impact customers and, hence, influence shopping habits and repeat business.

What are the effects of logistics on customer service and customer satisfaction

Retail is responsible for getting individual goods into the hands of consumers. Consumers these days have many choices about where they can shop for the same or similar items. Therefore, retailers are regularly in competition with each other for these consumers.

There are many ways to convince a consumer to purchase a product from one retailer rather than another. Customers consider factors such as whether the item is identical in quality, the cost of the item at each retailer, and how convenient it is to shop at the different retailers. A more responsive retailer will inspire greater customer loyalty.

Logistics can affect the ease of use of an online shopping cart or the availability of items in a store. It can expedite the order process and lead to shorter shipping times, as well as reduced shipping costs. It can also facilitate easy feedback and returns processing as needed. Retailers with as many convenient logistics features in place as possible are likely to attract discerning customers seeking a convenient and positive experience.

Solutions for retail logistics management

From raw materials to customer purchase, a product must travel through the retail supply chain. That includes inventory, packaging, transportation, freight, receiving, warehousing, disposal, and security. And each of those components requires effective oversight.

That’s a lot of moving parts. Effective retail logistics management of the supply chain is the only surefire way to meet customer demand.

Technological solutions for retail logistics management

The future of supply chain management is in creative and adaptable technologies that meet the ever-evolving needs and wants of consumers.

One example of supply chain technology is robotic process automation, which is artificial intelligence that allows software to handle many of the steps involved in a shipping transaction by eliminating the need for manual data entry. RPA is able to recognize, enter and respond to data and shipping information, triggering responses and interacting with other digital systems.

Another technology solution is a blockchain, a virtual ledger that allows for the secure exchange and storage of information involved in shipping transactions. Each process has a digital record, and the information is decentralized, transparent, and un-deletable. It is also recorded and available – in a secure fashion to authorized parties – in real-time.

Blockchain technology works well with all the trackers, wireless sensor networks, embedded systems, and automation that make up the Internet of Things (IoT). IoT devices embedded in products and packing enable businesses to track and monitor inventory and freight. IoT allows supply chain managers to guarantee inventory accuracy while customers and suppliers have access to real-time records.

More customers are shopping online and expect more retail sites. But according to an article by the NRF, of all online retail features, surveyed customers prefer certain non technological ones most: free shipping (nearly 70 percent), and free returns (just under 50 percent).

Overall, the entire online retail experience is vital, as Michelle Evans, senior head of digital consumer research for Euromonitor International, tells the NRF: “A consumer’s tech experience impacts brand perception more than any other interaction.”

Transportation costs drive retail logistics, and geography plays a key role. In the crucial last mile between warehouse and final destination, more cost-efficient carrier options are available. And on-demand warehousing, unburdened by long-term leases or fixed costs, provides flexibility where traditional warehousing solutions cannot.