Outbound logistics challenges can hurt profits and customer satisfaction. Inventory and shipping costs can rise quickly, while incorrect or late orders will drive customers away.

These are some specific outbound logistics challenges:

• Coordinating Operations: Outbound logistics teams must monitor production, storage and distribution—coordinating the optimal movement of goods is no small task. If production rises, the logistics team needs to free up more warehouse space, and as production increases to meet customer demand, shipping and delivery need to scale. Software and automation can help close the information loop by connecting production to storage capacity and demand.
• Achieving the Seven Rs: Coined by John J. Coyle, professor emeritus of logistics and supply chain management at Penn State University, the seven Rs are: getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, the right time and at the right cost. Consistently hitting these targets requires an integrated management process that uses data to assess performance, identify areas of weakness, and track and foster continuous improvement.
• Inventory Costs: Keeping enough inventory to meet fluctuating customer demand without creating unnecessary holding costs requires careful planning. Keeping a close eye on inventory planning metrics such as sell-through rate and inventory turnover and tracking numbers like safety stock and shifts in demand is important. See the comprehensive list of inventory management metrics for a list of key formulas.
• Transportation Costs: A major cost for outbound logistics is transportation. Companies can control costs by analyzing past spending to spot inefficiencies. Try exploring different strategies such as dynamic pricing, volume discounts with carriers, opening up bidding for your products/services and looking at freight marketplaces.
• Rising Customer Expectations: Consumer demands continue to climb, and free, fast delivery is now the expectation. Same-day and even two-hour delivery are the norms in some regions and industries. Customers want real-time visibility into the status of their orders and to be able to track them on a map. To meet this trend, logistics teams need to understand the role of delivery as a competitive differentiator and the lasting effect of a poor customer delivery experience.