Rate Hikes Are Coming, Can Your Logistics Management Help You Maintain Capacity

+ Add Your Article

Price increases tend to be the name of the game in logistics management no matter how frugal your approach to the job. As fuel prices increase and the recovery is building a more stable economy, you can be sure the price of nearly everything involved in your business will continue to increase. The question that you truly need to answer is whether or not you have the right logistics management platform in place to maintain your current capacity. Growth born of increase in consumer demand is one thing, maintaining the current pace without making cuts to cover costs is something different altogether.

Logistics Management Survey Captures Expectations

A recent Logistics Management survey found that those operating in the logistics, transportation and supply chain are anticipating higher rates throughout 2011. Many of these managers are already paying these higher rates and have made the adjustments necessary to sustain the increases. Of those participating in the survey, 34 percent indicated that they are in fact struggling to maintain capacity. In your logistics management role, you may have had to correct inventory levels and this could be a sign of new growth or sustainable growth. Either way that growth is important in the recovery to ensure you can still drive sustainable profits. With a healthy approach to logistics management, you should be on track to maintain capacity so you can meet customer needs.

Scrambling for Capacity in Logistics Management?

There are some in logistics management who believe there are no capacity concerns, or merely adjustments that need to be made to sustain the recovery. Still others believe that capacity issues will actually arrive at some point, either sooner or later. Those working in logistics management may be concerned over legislation that could determine how trucking companies and drivers are regulated. At the same time, those in your position may be legitimately concerned that improving business conditions and the anticipated rise in demand will strain current capacity. If and when this happens, those with a focus on logistics management may be changing their approach as tight capacity could play a more important role in the overall planning of the supply chain.

Will Tight Capacity in Logistics Management Work in Your Favor?

You likely already know the answer to this question, but to what degree? Capacity is always an important issue in logistics management, but you only control capacity to a certain extent. What about capacity for the market? Can others in your supply chainmaintain capacity and scale according to your growth? Does the growth of your competitors impede your ability to maintain the necessary capacity to remain a strong competitor? Logistics management must focus on capacity as a critical factor for success and this should be a conversation you are having with your supply chain partners. In all honesty, tight capacity wont always work in your favor, but you can forecast upcoming changes to be ready for inherent challenges.

Logistics Management: Embracing the Recovery

Now that shipping companies are not stressing as much as they were during the recession, they are starting to relax and raise their rates. This is normal during a recovery and something your company is also likely doing. Logistics management is all about anticipating those rate increases and managing your supply chain to meet your demand within your current capacity constraints. Yes, it is a challenge but one you can overcome with careful planning and strategy execution.

Related