The boom and bust cycle impacts every industry, and regional and global supply chains can be especially vulnerable to its effects. During boom times, shippers can enjoy high demand, strong margins, and a healthy bottom line—but they shouldn’t get too comfortable during these lucrative periods, as they will not last forever. Continue building a more robust and flexible supply chain.
While companies might lean more heavily on their logistics providers during periods of economic uncertainty, where efficiency and cost reduction are vital to survival, it’s up to providers to ensure their clients‘ weather boom times as effectively as possible. By making the most of these periods and ensuring that steps are taken to optimize operations, providers can put their clients in good stead to handle whatever the future holds.
Here’s what providers should do to be true partners during boom times.
Avoiding costly backlogs is a logistics priority, so optimization is key
Order backlogs can be the sign that business is booming. But when they become excessive or prevent a shipper from fulfilling its promises to customers, they can hurt customer satisfaction—and a company’s reputation and bottom line.
Providers must help their clients maintain a high level of service, whether the client is experiencing sudden spikes in demand or business as usual. Forecasting will play an important role in this, helping companies anticipate demand and plan accordingly. Leading providers will also pay close attention to the causes of backlogs to ensure they are a sign of increased demand—rather than a side effect of inefficiency or bottlenecks somewhere down the line.
Supply chain capacity needs grow, so expanding carrier bases is critical
With orders coming in thick and fast, shippers need to know they can get orders out as soon as possible. That requires them to expand their carrier capacity—and fast. The alternative is increased warehousing needs, sluggish delivery times, and an ever-growing backlog.
Expanding carrier capacity can be challenging during boom times. When carriers know their services are in high demand, they can pick and choose the jobs they want—and increase their rates at will.
This is where a well-established logistics consulting provider can make all the difference for their clients, leveraging their connections with carriers to help shippers access capacity that wouldn’t otherwise be available to them. At CTSI-Global, for example, our clients can tap our extensive network of trusted carriers to secure rates they wouldn’t find elsewhere—and find capacity at the drop of a hat.
Production is in high gear, but inventory should be monitored
During boom times, it’s natural for companies to want to produce large batches of their products, feeling assured that they will be sold at some stage. While this can keep backlogs and backorders to a minimum, it can also result in higher warehousing costs—especially if the tides change and demand plummets.
Logistics technology providers who are true partners to their clients will help them keep inventory at healthy—but not overambitious—levels during boom periods. This is another area in which accurate forecasting is important, as is close monitoring of economic trends and a watchful eye for the warning signs of a coming recession.
Premium air freight is acceptable, but spending should still be kept in check
When times are good, companies may need to rely more on premium air freight and other expedited shipping options to ensure they’re meeting customer expectations. While this is acceptable, providers need to ensure their clients don’t become dependent on these options, as they’ll need to be used sparingly during periods of uncertainty.
Taking steps to boost efficiency and avoid supply chain delays can reduce the need for expedited shipping. Providers can also help their clients monitor their spend at both a global and local level, allowing them to pinpoint whether any facilities are using premium options unnecessarily. After all, even boom times don’t excuse excessive freight spend.
A partner in good times and bad
At CTSI-Global, our mission is to help our clients be as successful as possible—whether the economy is lagging or booming.
After more than 60 years in logistics management, we’ve seen the boom and bust cycle run its course a dozen times. We know what strategies work and when, and we aim to be strategic advisors to our clients, helping them keep costs low and margins high no matter what.
Find a partner that will be there through it all. Contact us today.