Adapting to the Unpredictable: How Elastic Logistics Helps Business Thrive in a Dynamic Environment
Updated: Mar 12, 2023
Supply chains today face many challenges, such as fluctuating demand, global competition, environmental issues, and technological disruptions. To survive and thrive in this dynamic environment, businesses need to be flexible and agile enough to adjust their logistical capabilities according to their current needs. This is where elastic logistics comes in.
Elastic logistics is the ability to quickly shrink and expand logistical capabilities to align with a supply chain’s demand (DCL Logistics, 2021; Interlake Mecalux, 2021). It involves using data-driven forecasting, automation, cloud computing, and outsourcing to create an agile infrastructure that can reduce costs and improve efficiency based on the current need of the supply chain (DCL Logistics, 2021; More Than Shipping, 2021; Interlake Mecalux, 2021).
Some of the benefits of elastic logistics are:
Elimination of storage cost overruns: warehouse management systems predict the optimal stock levels for each location and adjust them accordingly. This means that supply chains can avoid paying for excess storage space or running out of space when demand spikes. It also reduces the risk of inventory damage or theft (Interlake Mecalux, 2021). For example, a leading manufacturer of earthmoving equipment scaled back their production from three shifts to one shift 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 (GEP Smart Solutions Blog).
Reduction of inventory obsolescence: demand planning tools help optimize inventory turnover and avoid excess or outdated stock. This means that supply chains can minimize the amount of inventory that becomes unsellable or expired due to changing customer preferences or market conditions. It also improves cash flow and profitability (More Than Shipping, 2021). For example, a fashion retailer used demand planning tools to analyze customer behavior and preferences across different channels and regions. They were able to optimize their inventory levels and assortments based on the latest trends and seasons. They also reduced their markdowns and clearance sales by avoiding excess or outdated stock (Interlake Mecalux).
Improvement of customer satisfaction: order fulfillment systems ensure timely and accurate delivery of products to customers. This means that supply chains can meet or exceed customer expectations and build loyalty and trust. It also reduces the cost of returns, refunds, or complaints (DCL Logistics, 2021). For example, an online grocery store used order fulfillment systems to automate and streamline their picking, packing, and delivery processes. They were able to offer same-day or next-day delivery options for their customers with high accuracy and quality. They also increased their customer retention and referrals by providing a convenient and satisfying shopping experience (DHL Logistics Of Things).
Enhancement of operational resilience: cloud-based platforms enable seamless collaboration and communication among supply chain partners. This means that supply chains can share real-time data and information across different locations and functions. It also enables faster decision making and problem solving (Datex Corporation, n.d.). For example, a global logistics company used cloud-based platforms to connect and coordinate with their supply chain partners across different countries and regions. They were able to share real-time data and information about shipments, orders, inventory, capacity, and performance. They also improved their decision making and problem solving by having access to analytics and insights (DHL Logistics Of Things).
Mitigation of external risks: outsourcing providers offer backup solutions and contingency plans in case of disruptions. This means that supply chains can rely on external experts and resources to handle unexpected events such as natural disasters, political unrest, or cyberattacks. It also reduces the impact and recovery time from such events by having alternative routes and modes (Datex Corporation, n.d.). For example, a pharmaceutical company outsourced some of their logistics functions to a third-party provider that had backup solutions and contingency plans in case of disruptions. They were able to rely on the provider’s expertise and resources to handle unexpected events such as natural disasters, political unrest, or cyberattacks. They also reduced the impact and recovery time from such events by having alternative routes and modes (GEP Smart Solutions Blog).
Elastic logistics is not only a trend but a necessity for modern supply chains. By adopting elastic logistics , businesses can gain a competitive edge in the market and cope with changing demand and disruptions more effectively.
DCL Logistics . (2021). What is Elastic Logistics? Retrieved from https://dclcorp.com/blog/supply-chain/elastic-logistics/
Interlake Mecalux . (2021). What is elastic logistics? Retrieved from https://www.interlakemecalux.com/blog/elastic-logistics-what-is
More Than Shipping . (2021). Elastic Logistics: The New Normal for Supply Chain Management. Retrieved from https://www.morethanshipping.com/elastic-logistics-the-new-normal-for-supply-chain-management/
Datex Corporation . (n.d.). Elastic Logistics: The Future of Supply Chain Management. Retrieved from https://www.datexcorp.com/elastic-logistics-the-future-of-supply-chain-management/
GEP Smart Solutions Blog . (2023). Elastic Logistics: Benefits, Implementation and Examples. Retrieved from https://www.gep.com/blog/strategy/elastic-logistics-benefits-and-implementation
DHL Logistics Of Things . (n.d.). Elastic logistics. Retrieved from https://lot.dhl.com/glossary/elastic-logistics/