Elastic Logistics: Benefits, Implementation and Examples

The global logistics market size touched USD 4.92 trillion in 2021 and is projected to reach USD 6.55 trillion by 2027. The e-commerce logistics market size was 269.34 billion in 2021.

The COVID-19 pandemic of 2020 caused severe supply chain disruptions. Businesses collapsed due to poor resilience during this time, and as a result started reconsidering ‘Just in Time’ strategies in favor of ‘Just in Case’ (JIC).

2021 brought about different supply chain and logistics challenges. The shipping and logistics industries faced severe capacity constraints, skilled staffing shortages and unbelievable freight rates. It also experienced port congestions, excessive delays and driver shortages, all due to the after-effects of the pandemic and explosive e-commerce growth.

Although supply chain disruptions will be the norm, the JIC strategy is valid only for safety and business-critical items and not for regular businesses. On the one hand, too much inventory leads to waste; on the other, too little leads to increased risk.

To address such challenges, resilience-promoting initiatives, such as flexible logistics and shorter supply chains, visibility and accurate forecasting, are the need of the hour.

How To Implement Elastic Logistics?

Elastic logistics is the ability of a business to rapidly reduce or expand logistics activities and infrastructure in line with supply chain demand using data-driven technology.

The perfect synchronization of technology, techno-savvy employees and supply chain operations makes elastic logistics possible. The final objective is to provide a memorable customer experience and competitive advantage.

The following are the ways an organization can roll out elastic logistics effectively.

Omnichannel Fulfillment Strategy

E-commerce businesses must rethink their fulfillment strategies and models to be in line with the elastic logistics strategy (reduced inventory through JIT and lean models) to meet the rapidly changing demands of customers and markets. This strategy provides a seamless experience across multiple devices and channels, both digital and physical.

Microfulfillment Points

Microfulfillment centers help a business rapidly expand its storage facilities to cater to an additional demand. This strategy involves converting additional space within existing stores and offices located strategically in urban areas to ensure quicker and cheaper deliveries.

Automation

Intelligent automation with mindful learning and scalable racks and shelving systems enable rapid adjustments to demand. Automations, such as RFID , barcodes and robots optimize the warehouse management processes and inventory, such as put away, picking, cycle count and same day distribution services.

Cloud-based Technology

For a successful elastic logistics strategy, businesses should invest in the latest cloud-based platform incorporating AI & ML technologies. The software delivers actionable insights from data gathered in real-time, thus enabling resilience. It enables end-to-end supply chain visibility and optimizes inventory management, planning and demand forecasting. This results in efficient and cost-effective fulfillment strategies and deliveries.

Elastic Logistics Benefits

• Customer retention is one of the significant benefits of implementing elastic logistics. This strategy ensures lower costs and faster deliveries in addition to providing real-time tracking to customers.
• Route optimization is another advantage that results in lower overhead costs and quicker deliveries.
• Volatility in pricing is reduced since the logistics facilities used vary per the demand.
• Businesses benefit due to reduced risks and increased resilience.
• The various supply chain and logistics processes are optimized for efficiency.
• Deadstock or out-of-stock situations are reduced, thus ensuring a memorable experience for customers leading to retention.
• Efficient utilization of resources – personnel, money, materials and infrastructure.

What’s the Impact of Elastic Logistics on Customers and Brands?

Organizations embracing elastic logistics are generally customer focused. One of their primary objectives is to provide memorable customer experiences for retention and gain a competitive advantage.

A data-driven optimized supply chain ensures the tracking of products in real-time for updating all stakeholders, including customers. It also allows for effective collaboration between vendors and partners to move packages efficiently. Organizations have complete visibility and control of their supply chains via a single dashboard and have access to custom reporting and analytics. This helps businesses stay on top and expand or shrink their logistics facilities as required.

Elastic Logistics Examples: A leading manufacturer of earthmoving equipment scaled back their production from three shifts to one shift, resulting in lower workforce requirements due to a shortage of steel and other raw materials during the pandemic. Accordingly, they reduced their warehouses to cater to only one plant's input and output items.

Another manufacturing company in textiles and apparel moved its entire business online by closing down its physical stores. Most of the staff were retained and trained in handling the new business. These companies were able to implement such drastic measures due to quick thinking, investment in the right technology and reduction in their outsourced facilities and contracted staff.

The cost of customer retention is just a fraction of the initial cost of acquiring a customer. Thus, money spent on boosting customer retention is an investment providing high returns to companies and their brands.

Conclusion

Today, customer-centricity is more crucial than ever, and providing a memorable experience to customers is a goal that winning businesses should adopt. Failing to utilize elastic logistics strategy to adapt to fluctuating market demands in the current and future economic scenarios may be a recipe for disaster.