In recent years, the only thing predictable about the supply chain has been its unpredictable nature. Whether disruptions come from extreme weather events, tension between nations, overwhelming peak season demand, economic instability, or some other as-yet-unseen Black Swan event, supply chains must have the capability to adapt in a fluid and decisive manner.
Supply chain professionals have built up a few buzzwords in recent years, such as resilience, agility, or digital transformation. In the end, these terms all represent the same goal: elasticity. Elastic logistics mean that a supply chain can adapt to fluctuations in demand and changing global conditions effectively and efficiently.
Important Features of Elastic Logistics
Building a truly elastic logistics operation requires approaching the issue from multiple directions, ensuring that you have the right technologies and processes to identify problems while they are still small, and reacting to unforeseen issues with speed and agility. Some of the key features found in elastic logistics operations include:
- Modern technology. The supply chain sector has made significant investments in the development of technology solutions that facilitate resilient and flexible supply chains. Artificial intelligence (AI), machine learning, and predictive analytics help logistics stakeholders forecast demand, optimize routes, and automate some decision-making processes. Other solutions, such as the Internet of Things, give shippers access to real-time visibility of cargo and inventory to enable timely adjustments. Ultimately, the right tech stack will be the cornerstone of any elastic logistics setup.
- Scalability. The most efficient supply chain in the world is no good if it can’t adjust to fluctuations in demand. Ensuring elastic logistics means having the ability to scale up operations in virtually any situation. Temporary labor, automation, and more non-traditional solutions like on-demand warehousing and crowdsourced delivery platforms can help improve scalability for companies with limited labor or assets. Conversely, a dip in demand might require an organization to scale back operations temporarily to cut costs until demand returns.
- Cost Efficiency. Elastic logistics require organizations to match resources with demand. Businesses should avoid overspending on warehouse space, private fleet assets, and other fixed assets during low-demand periods, instead relying on third-party logistics (3PL) partners and other partnerships to scale up when necessary. Maximizing capital in this way ensures that the business has sufficient funds available to adapt when a disruption occurs.
These features help businesses adapt to market and demand changes as needed, instead of succumbing to the limitations of outdated logistics models. With elastic logistics, companies may experience a variety of benefits, including:
- Improved customer satisfaction due to fewer disruptions
- Cost savings and improved sustainability through better resource optimization
- An ability to pivot in response to virtually any demand shift or disruption
Real-World Applications of Elastic Logistics
It’s easy to talk about elastic logistics in the abstract, but the reality is that businesses across industries reap the benefits of this type of logistics model every day. Here are some examples of how elastic logistics work in real-world environments:
- E-commerce. E-commerce businesses know that consumers are fickle and may abandon a brand after a bad experience. That means online sellers must adapt to demand shifts during peak sales periods like the holiday season. They must also keep orders moving in the face of extreme weather events and natural disasters, such as wildfires, hurricanes, or blizzards.
- Healthcare. The COVID-19 pandemic demonstrated the need for flexibility and agility in the medical supply chain. When the on-time arrival of an order can mean life or death, and many of the goods are perishable, it’s essential for healthcare stakeholders to have the ability to pivot if something isn’t going to arrive as expected.
- Manufacturing. With proper data and visibility, manufacturers can adjust production schedules and book transportation for finished goods based on market shifts. For example, a manufacturer facing a critical material or component shortage might run fewer shifts to keep costs down during the shortage if they have the right data and market insights to see the shortage coming.
- Retail. Brick-and-mortar retailers have been using many aspects of elastic logistics for years, especially during the holiday peak season. Retailers often turn to on-demand warehousing and 3PLs during peak season to expand operations beyond their usual capacity.
In an uncertain world, elastic logistics help businesses feel more confident in the ability of their supply chain to respond effectively and even thrive in the face of disruption. If you’re interested in building more elasticity into your logistics operation, reach out to us to see how we can help.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of the giant industrial real estate firm, Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.
