Fixed vs. Flexible Logistics: How to build your ops strategy

Over the last two years, global supply chain chaos has upset world commerce. Very few came out unscathed, as 75% of businesses took major blows to their manufacturing, and managing logistics still remains a challenge.

Competition has become stiffer in the post-COVID market as brands clamor to regain ground and scoop up their competitor’s market share. Whether you have established roots with physical stores or are staking your claim on the online turf, you can get ahead through an under-utilized move: upgrading your logistical operations strategy.

In this post, we’ll explore the ins and outs of flexible and fixed logistics, detailing who they serve and under what circumstances. We’ll also share our step-by-step formula for crafting a productive ops strategy, so you can gain the upper hand.

Table of contents

  • The scoop on fixed and flexible logistics
  • 5 Key commerce trends shaping ops strategy in 2022
  • How to choose between fixed and flexible logistics
  • Wrapping up – Power growth with strategic logistics planning 

Need a hand managing your supply chain logistics? Discover how MyFBAPrep can help.

The scoop on fixed and flexible logistics

There are a few methods available to shake up your ops strategy and scale your business through uncertain times. The most popular are the fixed and flexible logistics approaches. 

How fixed logistics work

Fixed logistics require considerable company-owned assets that allow a business to own its fulfillment network. For example, a store operating under the fixed logistics model could own or hold long-term leases for assets like shipping vessels, warehouses, fulfillment centers, and van fleets.

A business using this method will also have to lean on multiple paid tools to execute their strategy successfully, such as:

  • Warehouse management software (WMS)
  • Inventory management software (IMS) 
  • Enterprise resource planning (ERP) software

The commitments and expert help required to launch a fixed logistics strategy can add up quickly. It’s also not uncommon for the system implementation to take two to three months or longer.

Fixed logistics are best for…

A fixed logistics setup works best for high-volume businesses with complicated supply chains, and the budget to make a substantial financial and time investment without seeing an immediate return.

This model allows retailers to automate and customize processes for supply chain efficiency and customer satisfaction. For example, as a retailer, refunding orders as soon as a customer drops off their package gives them the “wow” factor and provides real-time insight into cash availability.

When operations run smoothly and market disruptions are minimal, fixed logistics give owners greater control over their supply chain and operational costs. The result is a robust supply chain and a strong competitive advantage.

How flexible logistics work

A flexible logistics setup typically features minimal assets and lacks lengthy leases, contracts, or set square footage allocations and locations. As a result, a supply chain with flexible logistics remains nimble and can respond to the ebbs and flows of a business cycle. 

Instead of paying for multiple software to manage their supply chain, businesses that use the flexible logistics model gain access to these tools through their fulfillment services provider(s), without needing to fork over more cash.

However, this approach is less accommodating to unique fulfillment needs since it rarely offers automation or complex customizations. Instead, it oversees multiple businesses at once and streamlines operations. For example, under the flexible logistics model, your business could:

  • Share warehouse space with various brands
  • Work with different shipping carriers depending on customer demand and product type
  • Purchase pick-and-pack services according to the season

Flexible logistics are best for…

Fast-growing brands, especially eCommerce businesses, benefit from the flexible logistics model to optimize their omnichannel selling and expand restocking and fulfillment capabilities.

This setup also allows brands to adjust to supply chain issues and market shifts faster, without incurring huge costs or losses. It’s relatively quick to implement with many businesses setting up their flexible logistics systems in about two weeks.

Blending fixed and flexible logistics

If you’re unsure which model to choose, we’ve got great news: You can get the best of both worlds with an outsourced logistics partner. This partner will apply the fixed logistics model to key territories and core product offerings with high volumes, and reserve the flexible approach for fast-scaling products, new offers, and volatile markets.

Companies like MyFBAPrep can provide custom logistics solutions to enterprise merchants who find flexible logistics too limiting. A great example of this blended approach in action is the Pacers Running’s story. The company was unable to leverage flexible logistics with a 3PL that tried to put them in a box. Pacers Running’s luck changed when they joined forces with MyFBAPrep, which worked with them to produce a tailored fulfillment strategy and customized their chosen location to accommodate it. In one instance, MyFBAPrep installed a rack system to ensure the company’s warehouse met Pacer Running’s specific needs.

An optimized ops strategy may be the missing piece to your commerce success. Learn how MyFBAPrep can help your business thrive.  

5 Key commerce trends shaping ops strategy in 2022 

Trends not only dictate consumer behavior — they also guide your ops strategy, influencing when it’s best to take a fixed or flexible logistics approach. To steer your logistics in the right direction, let’s hone in on some top commerce trends and how they could impact your brand.

1) Rising eCommerce orders 

COVID-19 kick-started an online buying frenzy, with commerce sales estimated to reach nearly $7.4 trillion by 2025. However, the pandemic-fueled spending spree appears to be tapering off.

Whether you’re a brick-and-mortar retailer or own an eCommerce store, you’ll need to process inconsistent order volumes efficiently to stay profitable and maximize sales, customer happiness, and business growth. This makes a fulfillment house that can scale with your brand and provide consistent prices, a paramount asset to your brand.

2) Increasing consumer expectations for fulfillment options

Consumers lead busy lives. This lifestyle naturally fosters similar expectations, such as faster and smoother order delivery, more control over where their orders are sent, and how they conduct returns. To maintain customer loyalty, you’ll need to build a logistics strategy that can handle inbound and outbound packages from multiple sources quickly and without hassle.

3) AI is gaining a firm grip on commerce logistics

Gone are the days of number crunching with calculators and square paper; AI has taken over the logistics realm. From lightning-fast bucket systems that organize stock to clever robots sizing up packages for optimal delivery costs, AI is helping retailers worldwide make smarter choices about inventory purchasing, distribution, and fulfillment. To gain a competitive edge, inject AI into your store in a way that aligns with your core business areas and furthers your goals.

4) Omnichannel selling is going mainstream

As competition increases in commerce, many brands are leveraging marketplaces to delve into omnichannel selling. To set your brand apart, invest in technology, branding, and marketing that presents a unified shopping experience to customers from the start of their journey to the end. With this in mind, your fulfillment strategy will need to handle orders from multiple sources with accuracy and speed.

5) Supply chains are still unreliable

Global commerce is beginning to recover from COVID-19’s initial supply chain disruptions. However, the world is still struggling to regain the efficiency it previously enjoyed with unimpeded travel. Success in the post-pandemic market requires you to fortify your supply chain. This is especially important if you run a large enterprise, as even a 1% increase in demand could result in you requiring thousands of more products.

How to select between fixed or flexible logistics

Choosing the best ops strategy for your growing business can be a daunting task, especially if supply chain chaos has burned you in the past. That’s why we’re here to help. Let’s explore the steps that’ll ensure your logistical setup matches every season and trend.

Evaluate your business needs

It’s vital to assess where your business is currently and where it’s going to understand which strategies and tactics will help you get from point A, to point B most efficiently. Some questions to ask yourself include:

  • How big is our business right now?
  • What size do we want to scale to?
  • How many SKUs do we carry?
  • Are we planning to add more products? If so, when and how many?
  • How many territories does our business cover?
  • How quickly do things change?
  • Is our fulfillment process complex?

Outline your deadlines and deliverables

The next task on your ops optimization to-do list is to establish deliverables and key performance indicators (KPIs). To ensure your team has solid targets to work towards and assess progress against, write and distribute the essential details of your end vision, such as:

  • Mini goals you need to hit to reach your end target
  • Exact steps to meet every mini goal  
  • Resources you require to hit your target

Learn what your competitors are offering and develop ways to surpass them. For example, stats show that 51% of retailers provide same-day shipping, and 65% intend to make it available within two years. You can rise above this standard by offering same-day redelivery to a selected address, if the shopper misses the first delivery attempt.

Logistics don’t need to be complicated. Learn how MyFBAPrep takes the hassle out of optimizing operations

Tap into the right AI for your business size and ambitions

Digital transformation is sweeping through commerce, which means you no longer have to implement a specific approach manually at any given time. Instead, you can rely on AI technology to make accurate calculations on your business’s current logistical needs and adjust your ops setup accordingly.

For inspiration, look no further than the eCommerce behemoth, Amazon. Here are just a few ways Amazon combines technology with strategic logistical planning to supercharge its logistics:

  • Increased its suburban delivery hubs to accommodate more same-day and next-day shipping.
  • Uses route optimization software to reduce delivery mistakes and maximize work hours.
  • Employs computer vision systems with AI-driven pods to categorize and track goods in their warehouses.
  • Relies on AI-driven purchase forecasting to optimize item location within each warehouse.
  • Uses an item categorizing system to reduce sorting errors.
  • Implements random, itemized placement on shelves tracked through barcodes to save space.

The point is, no matter your business size, you can harness the power of AI to take your logistics to the next level. If you’re a small seller hoping to grow to a medium-sized business, you could tap into AI-backed Inventory forecasting and inventory optimization solutions. If you’re a medium-sized business aspiring to become a large enterprise, you could implement barcoding analysis and robotics-assisted sorting, picking, and packing. 

Get your suppliers and carriers on board

Every contributor to your supply chain has to work efficiently and in unison to obtain the speed, cost savings, and agility you need for operations to run smoothly. Communicate your goals to your suppliers and carrier(s) and ask them what they need from you to fulfill their roles.

  • Maintain clear, constant communication with all your partners to spot issues and opportunities early.
  • Vet each supplier and carrier regularly and be ready to swap out unreliable partners.
  • Maintain a 360-degree supply chain view to identify problems and alert the relevant parties in your network to prevent the issue(s) from spiraling.

Adopt the right tools and resources to facilitate growth

Whether you opt for fixed logistics, flexible logistics, or a blend of the two, you need to choose the right tools to streamline your operations and push your next growth stage. Some tools to implement or to ensure your fulfillment provider utilizes are:

  • Demand forecasting solution
  • Barcode printing, scanning, and monitoring equipment
  • Inventory management software
  • Distributed order fulfillment technology
  • Warehouse management software
  • Fleet management software
  • Cloud-based file storage
  • Compliance tool
  • Analytics and reporting tools  

Tip: Many solutions combine tools for more efficient logistics management. Get the most bang for your buck by researching the best solutions for your mission. Check out inventory optimization software if you need a starting point.

Data analysis is your best friend

The numbers don’t lie. Assess your figures from past periods, noting when your logistics strategy excelled and when it fell short. You can deduce what type of ops strategy fits certain scenarios, incorporate them into your current process, and draft action plans for future endeavors. Here are some data points to watch: 

  • KPIs
  • Growth figures
  • Delivery rate stats
  • Customer feedback

Wrapping up — Power growth with strategic logistics planning

As the fixed versus flexible logistics debate continues, rest assured that you don’t have to pick a side; you can have the best of both worlds. Being agile with flexible logistics is more important than ever to dodge supply chain disruptions and adapt to market shifts. Meanwhile, fixed logistics pave the way for order and predictability as you scale.

To improve your ops strategy, implement technology to keep an eye on developing trends in your business, niche, and the global market. Then, tweak your ops strategy based on the most efficient setup that’ll help you achieve your goals.

With a robust strategy, you’ll build greater resilience into your brand, upping its productivity and value. So, don’t wait — begin your ops strategy optimization today. Your future self will thank you for it.

Technology and robust strategy create razor-sharp logistics. Learn how MyFBAPrep can hone your supply chain today.