Your 5-minute guide to risk management in logistics

The world of logistics is fraught with risks. Discover 5 common pitfalls – and how to mitigate against them.



"There are risks and costs to action," said former US President John F. Kennedy. "But they are far less than the long-range risks and costs of comfortable inaction."

The world of logistics is a world of risks. Inventory gets lost or sent to the wrong address. Deliveries get stuck in traffic. Prices rise. Prices fall. Demand changes. And that's before you get to the Big Stuff: wars, pandemics and economic downturns.

Risks are to warehouse-based businesses what water is to goldfish. You can't escape the risks that surround you. But you can put measures in place to mitigate against their worst effects.

This is partly a case of staff management and partly a case of cannily allocating finances. But above all, it's a case of managing your warehousing and logistics functions as efficiently as possible.

And just as risk management is multi-faceted, so too is warehouse management. Visibility, accuracy and predictive analytics are essential tools – and they're all tools that can be found in a cloud-based warehouse management system (WMS).

In our view, you can't mitigate against risks in logistics without a capable WMS. That's not the whole story – but it is a central theme.

So, what are the risks and how can you manage them? Let's take a closer look. 

1. Inventory mismanagement

If you run a warehouse-based business, you'll know that inventory management is the name of the game. And on paper, at least, it should be a game that's easy to learn and play.

Really, all you need to know is how much of every item you have in stock and how much is coming in and going out. You also need to be sure your goods are in good condition – especially if they can spoil in storage.

Easy! And yet, such a complex subject when put into practice. The more items you stock and the faster the turnarounds, the more likely you are to lose track of your goods. And when you lose track of your goods, customers begin to lose trust in you.

That's why you need detailed visibility into all aspects of your warehouse operations – from picking and packing to dispatching and replenishing.

A good cloud-based WMS gives you the status and location of all your stock. This data can be accessed from any device, in any location, at any time – and it's updated in real time.

What's more, a WMS can be integrated with a voice picking system to ensure near-perfect picking accuracy. This is a subject of its own. Suffice to say, it can make a huge difference when your warehouse stocks a wide range of SKUs.

2. Transport issues

Delivery is at the heart of any warehouse-based business. Inefficient transportation is a surefire recipe for lost goods and lost customers – not to mention online heat.

However, unlike inventory mismanagement, transport issues typically come from the outside. You can control your picking process, but you can't control the flow of traffic on the M5.

You can, however, put measures in place to prepare for the worst and quickly adapt to difficult circumstances.

This is a largely technological fix. Real-time tracking via IoT sensors and GPS lets you monitor deliveries and instantly reroute your drivers in the event of a snarl-up or worse.

Predictive analytics can also play its part. This is where a WMS crunches raw data and spits out insights into your operations. In the case of transportation, it can help you identify route inefficiencies, fuel inefficiencies, surges in demand and more.

3. Keeping up with compliance

All businesses operate within constraints – and one of the most punitive constraints is compliance.

Every aspect of logistics is covered by compliance: from moving, storing and handling goods to data privacy and environmental rules.

And it's not as if businesses conform to compliance out of the goodness of their hearts, whether or not they agree with the regulations. It's because falling foul of compliance can result in fines, delays and reputational damage.

Achieving compliance takes lots of work. It involves policy-making, regular audits, staff training and a culture of accountability.

It also involves data visibility. Without having your operational data at your fingertips, it's hard to tell whether or not you're acting in line with compliance.

This is another reason why a cloud-based WMS can help you manage logistical risk. It gives you a granular oversight of your operations so you can nip non-compliance in the bud.

4. Bottlenecks

You can't run a business without bottlenecks. This could be down to limited warehouse space, customs delays, staff shortages or poor planning. But while you can't eliminate these issues, you can mitigate them with real-time, data-driven reporting.

A cloud-based WMS deals in facts, not fancies. It shows you which SKUs are moving slowly and why. Armed with this data, you can take steps to make adjustments and bring your business closer to the dream of data-driven decision-making. And unlike analysts and consultants, warehouse management systems produce reports with just a few clicks of the mouse.

5. Supply chain disruption

Once upon a time, supply chains lived up to their name. Sure, a link might snap here and there – but ultimately, you could rely on suppliers to move their parts and components with ease.

In the 2020s, this seems as quaint as the rotary telephone. Supply chain disruption is now the norm, thanks to circumstances beyond our control. You can't stop a pandemic, tariff or military conflict any more than you can stop the wind from blowing.

What you can do is map your supply chain and look for areas where relationships can be strengthened and contingencies factored in. This means that you're in a strong position to readjust and reroute when things get sticky.

You can't eliminate risk. However, with granular visibility of warehousing and logistics operations, you can go a long way to mitigating it. Minster's warehouse management systems are designed with data visibility in mind – and come with robust stock management and logistics optimisation software included. Want to see how our systems can safeguard your operations? Book a demo with our UK team today.