Guest Post: 8 Logistics Challenges for Startups – and How to Overcome Them

Jul 18, 2022

Getting the proper logistics is amongst the most challenging tasks for most companies today, especially startups. Many startup companies think that manufacturing the right product will fill that market gap, and having sufficient funds or launching a website is enough to succeed in the market. But suppose a company wants to strive in the market and move away from the startup phase; in that case, they need to develop a logistics strategy to meet the customers' needs with minimal resources.

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But before setting any logistics strategy, it is essential to understand startup businesses' challenges. Here you can learn about the logistic challenges faced by several startups so that you can prepare yourself before entering the market.

Basics About Logistics and Its Components

As per last-mile delivery experts, the process of acquiring resources and delivering the product at the best quality at the right address all falls under the logistics part. 

The significant parts of logistics include:

  1. Managing the fleet

  2. Outbound and inbound transportation

  3. Warehouse operations

  4. Handling materials

  5. Order fulfillment and demand planning

  6. Managing stock

Startups face logistics challenges due to a lack of funds, knowledge, or employees. Several businesses don't scale simultaneously, even with money or a delivery team. A great logistics strategy can solve delivery challenges. A logistic approach mainly contains the six elements mentioned above. It includes capital acquiring the resources, storage, and conditions you need to deliver the products to the correct destination successfully. 

The components include transportation, drivers, developing and managing a warehouse, handling materials, and order fulfillment. To ensure your delivery challenges are gone, you must provide a logistics strategy that tackles the above-mentioned elements. If your company fails on any of the major components, then there is a high chance that you will deliver late or not keep a well-stocked warehouse.

Why Does Logistics Play a Crucial Role?

As you know, several startups focus on producing and designing products to align with customer satisfaction. But the main point here is that what is the entire point of investing time or money in these elements if products cannot reach the right customer at the right time. That's where logistics and delivery come into the picture. Logistics service plays a crucial role in buying the raw materials and storing them while required for the manufacturing purpose of the products, transportation, and delivery of the final goods on time.

The more you continue these operations on time and effectively, the more profit your business will earn and the longer its viability will be.

Your customers expect you to deliver all the products and services on time because the other retailers have already set a precedent. Furthermore, offering the same delivery services is not just great for clients; it is essential if you want to survive in the competitive market. You should not spend much money on resources if you do not deliver the product on time.

Some of the most common challenges faced by startups are:

  • Product Sourcing:

Several manufacturers generally commit the mistake of keeping only one seller on the outsourcing. Instead, startups need multiple sources, so they do not fall short of stock. Coordinating with numerous sources can be challenging. This can be overcome by having a centralized inventory system. However, it will ensure that sellers deliver the materials on time and are updated regarding the staff's business requirements.

  • Managing Stock:

It is all about managing the raw materials sold to the end-user. Stock can be the most significant asset or the biggest liability, depending on how the company handles it. It is imperative to manage stock properly, especially for a startup business. Even the sourcing of less inventory needed than what is needed can lead to businesses losing the profits they can otherwise gain. But to manage stock efficiently, startup companies need to have real-time software in place.

  • Warehouse Management:

Several startups start by thinking they can store the entire inventory at the primary location. But instead, as the business starts growing, companies need extra space to store the additional merchandise. But in the long run, having a warehouse for inventory-holding purposes is good. But warehouse management can be expensive for some startups as companies now have to bear additional expenses, including electricity, rent, and others. As a result, most startups are now partnering with 3rd party providers to focus on the core business and allow the 3rd party providers to take care of the stock.

  • Managing Shipping and Logistics:

One of the startups' most crucial processes is managing activities directly impacting customer service. For the same reason, most businesses depend on 3rd party companies to handle the shipping and logistics processes. But depending on just one courier partner will limit the shipping of business products across different locations. Hence, it is always recommended for startups to have various courier partners to expand their reach to a great extent.

  • Fulfill Orders:

Managing orders, picking or packing the product, and shipping the final product can be done under the order fulfillment purview. To ensure that these operations are performed without errors, startups must have well-skilled experts. Unfortunately, several startups mainly compromise on the quality of packing material they use due to the unavailability of suitable packing material at a reasonable price. It might tamper with the packaging and lead to an unsatisfactory customer experience. Hence, it is great for companies to purchase bulk raw materials and store them for future use.

  • Managing The Returned Orders:

All the companies offer a returning order option, especially if they run an eCommerce business. If you are new to the industry, not giving the customers a chance to return the product can lead to several business losses. Hence, being a startup, you need to have a defined return policy. Besides the return policy, your company should have well-built reverse logistics in place so that you can manage the return orders perfectly, as the cost might double as compared to the forward orders.

  • Providing Top-Notch Customer Service

To run a successful startup, you need top-notch customer service to earn profits in the long run and sustain yourself in the competitive market. Companies must have an effective process to handle all customer queries and well-trained executives to address these queries. Startup companies can implement customer management software to address customer queries on time.

  • Internal Shipment Issues

Delivery is the biggest problem with customer service, and even if you deliver local products on time, you might find it challenging on the international front. You might have two choices that are top shipping globally or partnering with different countries with an excellent track record.

How Can Startups Solve Their Logistics Problems?

  • Outsource Logistics Services:

To stay relevant in the competitive market, all growth-oriented businesses need a different range of services and products. Customers today want a complete experience and a comprehensive package, so it's no wonder that fulfillment companies have greatly diversified in the past few years. It's no wonder how beneficial it might be for your brand, and its reputation can be a true logistics nightmare.

  • Ensure Great Use of Logistics Software

Whether someone is helping you or running the logistics department in-house, you need to keep track of the inventory and stay on top of relevant product information to minimize expenses and make the most of the cash flow. Using comprehensive logistics software is imperative to achieve this. Contemporary logistics software is customized for all types of businesses, irrespective of industry size or growth potential.

  • Organize Inventory for Optimum Efficiency

An important element that builds a thriving company is inventory and handling speed. If you do not have to protect, classify, or store well, you will likely increase your financial loss and go through a lack of performance regularly. You can prevent this by optimizing the storage scheme and introducing proper tracking solutions to help you easily manage your stock and handle all the goods well.

  • Keep Tabs on the Competition

In any industry or every sector, there needs to be a way for small companies or startups to compete with the bigger fish in the pond or build a name that people around them can trust and steadily grow over time. It may seem challenging if you are a startup or consider yourself small compared to the logistic challenges you are facing. However, you first need to learn from the experienced players in the market and understand how they handle the logistics regularly. Often, the most comprehensive solution to the challenges will be to hire a professional agency to lift the burden of logistics management.

Conclusion

One of the biggest challenges for startups today is logistics and how the company must care for their inventory supply chain or transport depends on the business. You can understand a company's challenges, and the solutions mentioned here can help you relate to your situation.

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