SMBs Face Logistics Challenges at Different Business Stages

Author: Eugene Panfilov, Managing Director, Borzo India

Small and Medium-sized Businesses are the whole and sole of the global economy as they are the major contributors of job creation, economic growth, and innovation. But SMB’s especially in their initial phases face distinct challenges while managing logistics, especially when they start to grow.  

As these companies move from being new to becoming bigger, they have to deal with more inventory, larger distribution networks, and keeping costs low. They need flexible logistics solutions that can handle changing needs and different delivery requirements. This growth phase is tough because they have to balance running their operations well with meeting the needs of more customers. This can show weaknesses in their logistics systems and how they manage resources, which can affect their business success and long-term growth. 

MSMEs highlighted various challenges they are facing at different stages of business at MSME conference Borzo connect:

1. Initial Stage: Do-It-Yourself Logistics

In the initial stages of business one has to do it themselves. As SMBs often have low structure or minimal structure with limited resources, and low demand and volume. So one cannot go to a courier company or a logistics company and negotiate good rates for you. Hence, businesses at this stage may resemble a “do-it-yourself kit,” where the entrepreneur handles logistics alone. 

For SMBs in this phase, on-demand deliveries are often the most viable solution.The core product offering of urgent, on-demand deliveries, helps businesses manage their logistics more efficiently despite low demand and minimal resources.

2. Growth Stage: Balancing Expansion and Efficiency

Even when SMB’s are growing it doesn’t really get better. As SMBs grow, they face a new set of logistics challenges. During this stage the business expands its customer base, leading to increased demand and more complex logistics needs. The key issues during these stages are

• Peak Hours: As due to increased demand, and increased customer base new challenges occur. Thus, businesses tend to experience fluctuations in order volume due to peak hours and seasonal demand, complicating logistics management.

• Weather Conditions: Factors like adverse weather can further impact delivery times and reliability, such as the monsoons.

• Increased Complexity: Due to increased demand, businesses can no longer handle all logistics tasks internally and need to find a balance between control and outsourcing.

During the growth phase, SMBs can benefit from hyperlocal deliveries and flexible scheduling options. This allows businesses to cater to neighborhood clients with tailored solutions and manage costs by choosing delivery times and prices that fit their needs.

3. Mature Stage: Strategic Partnerships and Optimization

At the mature stages, as SMBs have already established businesses, so the focus shifts to strategic partnerships as business has volume, density and they also have better outing and planning. But certainly, irrespective of a high flourishing business, they still face certain challenges at this stage because of the high volume, high costs, better rates and services with logistics providers.

Mature businesses offer up to 40% cost optimization through solutions like same-day delivery. The extensive network of riders and its negotiation capabilities make it easier for businesses to secure favorable rates and reliable service. The system simplifies the negotiation process and helps businesses optimize their logistics strategy.

Simplifying Management and Enhancing Delivery Quality

A powerful logistics platform aims in dealing with the particular issues that SMBs face, setting itself apart by handling negotiations and communicating its way with many riders and delivery partners and customers. This system makes things easier by negotiating different rates and services on the SMB's end, hence, they can take advantage of the scale and expertise of, without the burden of dealing with many logistics partners. 

The assurance of the safety of the deliveries being the top priority, prioritizing both cost and speed also emphasizing in delivery quality. The sophisticated and well-developed algorithms ensure that the premium items receive the special ways-of-handling them, and the rider rating system is also capable of maintaining the service level by giving top-rated riders to the deliveries. 

Hence, the logistical challenges may not ease up during the course of a company's development, but using the right platform will be the key to avoiding them and getting quality solutions for logistics and at the same time optimizing the logistics operations.

Conclusion

As small and medium businesses move through various stages of growth, they have to deal with different issues related to logistics, such as managing DIY logistics at the early stage, balancing expansion and efficiency in the growing stage, and, finally, finding the best way to decrease costs and improve services in the mature stage. The logistical needs of SMBs are becoming more elaborate as they change, which means they require specific responses that are agile and can handle increased demand for them and their operations. Companies can simplify their business processes, cut costs, and improve operation provisions by forming close alliances with reliable logistics partners and advanced logistics platforms. Solving the problems by professionals targeting growth and achieving stability in the trade market is the major pillar of business success.