Common Challenges in Managing Global Logistics & How to Overcome Them

MercuryGate Blog - Carrier Management Category
The globalization of the supply chain continues despite declining trade intensity. New services and technologies offer the opportunity to add value to the global supply chain and cut logistics costs. Common misconceptions also influence the state of global logistics; many shippers believe a talent shortage causes issues. However, according to McKinsey & Company, labor costs only account for 18% of logistics problems. Instead of thinking about the global supply chain only in terms of people, shippers need to think holistically about the challenges of managing global logistics and how a transportation management system (TMS) can help overcome them.

Managing Global Logistics Means Considering More Risks and Volatility

Global logistics grew 2.8% through 2016 and surpassed 3.6% in 2017, reports Business Insider. Global supply chains are inherently longer, presenting more exposure to risks and disruption. Natural disasters, health epidemics, changing tariffs, and aging infrastructure across the globe affect supply chain volatility. The uncertainty becomes self-propagating, resulting in additional risks throughout the industry.
For instance, rising U.S. diesel fuel prices and changing surcharges affect global logistics and can result in higher transport costs and even lower wages for drivers. These risks contribute to the likelihood of less available capacity, undermining efficiency, and leading to volatility, notes Logistics Management.

Global Logistics Leads to More Variability and Trouble in Demand Planning

The complexity of managing global logistics also leads to added variability. Variability describes the difference between expectations and actual events. Longer supply chains are subject to more risks, so the final activities may not reflect the planned activities. Such variability leads to challenges in demand planning, such as ordering raw materials, working with business-to-business retailers, and available capacity.

Longer Supply Chains Often Lack Visibility

Longer supply chains typically translate to less visibility. Decreased visibility derives from the continuous transition between carriers, freight brokers, third-party services, and modes. Estimates of the lack of visibility remain near 40%. Without visibility, revenue losses become more severe and disruption risk increases.

Language and Cultural Barriers Remain

Barriers between countries, ports, trade regulators, freight forwarders, 3PLs, and business-to-business partners are another challenge in managing global logistics. Barriers exist, and failure to consider the obstacles may result in inaccurate shipment processing and the inability to collect payment. Meanwhile, incompatible systems may lead to additional delays and headaches for shippers and logistics service providers.

Deploying a Global Transportation Management Platform Solves the Challenges

Investing in a transportation management system (TMS), or a dedicated platform, overcomes the challenges of global logistics in several ways. Benefits include:
  1. Data-driven capabilities help manage volatility. Since the TMS gives you better control over all your transportation data, shippers and users can apply this data to handle fluctuations and changes in demand.
  2. Decreased variability. More information further improves the ability to ensure actual activities reflect planned activities.
  3. Improved, centralized controls increase visibility. Breaking down data silos, and sharing information through a centralized TMS increases visibility, improving responsiveness along the way.
  4. Cross-border use ensures compliance with applicable regulations, as well as overcoming language and cultural barriers. Keeping all documents and compliance measures within the TMS improves compliance and eliminates concerns over language and cultural barriers.
  5. Advanced systems rely on EDI and APIs to connect to “incompatible” systems. Modern systems can communicate automatically and reduce the risk of lost information, while also optimizing scheduling and management.
  6. Cloud-based platforms transcend the limits of traditional, on-premise solutions. Relying on the cloud ensures global access and reduces the risk of disruption following an adverse effect, including weather-related disasters and trade conflicts.

Put the Power of an Advanced, Global TMS to Work in Your Enterprise

An advanced TMS relies on software-as-a-service subscription models, artificial intelligence, and modern, RESTful connectivity to promote logistics management. Globalization is expected to continue as e-commerce expands, and supply chains will grow more reliant on one another. The evolution demands a cloud-based, scalable solution, such as SaaS TMS.

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One Response

  1. I see you have highlighted all the major challenges in managing global logistics. The dynamics of the logistics industry is changing continuously due to the changing trend and constant innovation in technology. In today’s modern world it is possible to overcome any challenge using the latest technology, hence the logistics industry must stay ahead of the competition by constantly innovating and improving its technology. Thank you for sharing this informative article with us. I learnt a lot of new things from your article.

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