Retail Logistics: Definition Functions and Challenges

retail ecommerce logistics

What is Retail Logistic? ‘Retail logistics’ is the process of managing the flow of goods from the source of supply to customers through the efficient movement of logistics. The retail logistics system is highly dynamic and customer-focused in nature, these end-to-end supply chains need a high degree of synchronization and collaboration—both of which are being made easier by technology.

Several key challenges are associated with retail logistics, including product availability, energy usage, and costs. The following article will look at the functions and challenges of retail logistics. It also examines the methods used to overcome those challenges and improve the process. This article also discusses embedded integration technology and product availability. It also explores the challenges associated with energy-intensive activities of transportation. It concludes with a discussion of possible improvements.

Embedded integration technology

Embedded integration technology is becoming increasingly important in retail logistics, with logistics providers recognizing the need to make data sharing a seamless process. Embedded data platforms enable the integration and connection of data and are essential for supply chain agility. Embedded software provides businesses with business-level dashboard views and 24/7 monitoring. Embedded software also enables the creation of new value-added services, which help retailers respond to customer demand and meet service-level agreements.

Embedded integration technology facilitates seamless integration between on-premise and cloud-based customer systems. It offers the pre-configured application and B2B connectors, which help simplify the integration process and decrease maintenance time. Embedded integration technology offers a quick spin-down architecture and flexible licensing options. This makes it easy to deploy and use, and it supports inflexible infrastructure patterns. The technology has enabled businesses to achieve high levels of automation in their supply chains, resulting in reduced costs and more efficient operations.

Product availability

Poor on-shelf availability can compromise service levels in the supply chain, and ultimately fail the entire system at the point of sale. Product availability has the greatest impact on consumer behavior and sales. A recent study examined the impact of on-shelf availability for dairy products, frozen foods, and health and beauty products. Availability affects sales, customer loyalty, and a host of other factors. Here are some common reasons why products aren’t available on shelves.

One of the most common causes of empty shelves is low inventory. This is due to a variety of reasons, including product out-of-stocks, poor forecasts, and over-promotion. Retailers can prevent these problems by monitoring their inventory levels and taking appropriate actions when demand is not meeting expectations. Real-time data analysis helps retailers analyze sales trends and predict shifts in demand. It helps manage inventory costs while meeting customer demands.

Costs

While labor, supply chain technology, and the like are all necessary for effective fulfillment, many DTC brands outsource retail logistics to a third party. While this method can reduce labor costs, it can also increase the overall logistics cost. In addition to the high labor costs, retail logistics operations can be complex, and outsourcing these processes may be a better option. For example, DTC brands often outsource retail logistics to a third party to minimize costs and time.

The costs involved in the distribution of goods depend largely on the characteristics of the retailer. Fast turnover of stock tends to reduce distribution costs. Therefore, retailers with large volumes of goods can afford to apply lower distribution costs. But this doesn’t mean that they should cut costs altogether. The relative importance of various distribution costs will determine whether a company can make a profit or lose money. Retailers should therefore carefully evaluate their costs and determine what activities are the most profitable to reduce.

Energy-intensive activities of transportation

A significant challenge for the retail logistics system is the energy consumption of the last mile of transport. This includes the transportation of the product from the retailer’s last point of contact to its final destination, the terminal, or the point of consumption. Most of this transportation is performed by road, and energy use is high. For this reason, sustainable and energy-efficient solutions are needed. But how can retailers achieve this? The following are some ways.

In this study, the authors calculated the external costs and benefits of freight transport, and then fed this information into a framework based on sustainability indicators. The framework captures the sustainability performance of retail logistics by assessing the social, environmental, and economic impacts of each activity. By identifying the external costs and benefits of different logistics solutions, retailers can decide whether or not they are sustainable. The external costs and benefits of logistics activities can be calculated with the help of distance-oriented indicators, which consider the externalities associated with a specific activity.

Importance of visibility in supply chain

The importance of visibility is no doubt obvious. When you can track a product from the point of creation to the point of delivery, you can prevent shipping errors, increase operational efficiency, and leverage products. As your supply chain grows, managing it becomes a bigger challenge than ever. It’s also more complex when you consider omnichannel and traceability, not to mention the pressure of online orders. But, you can take the steps necessary to achieve visibility in your supply chain.

For example, larger retailers have the luxury of electronic connectivity. These companies can monitor sales at the SKU level, but they don’t always have the resources to track their goods in transit and at suppliers. As a result, visibility for their first-tier suppliers might be limited. And smaller retailers don’t have sophisticated visibility tools to track alternate suppliers. So, why is visibility so crucial in the retail supply chain?

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