The world's largest retailers and brands aren't making Amazon-like investments in fixed assets to compete. They operate more efficiently through technology-first solutions. For eCommerce fulfillment and warehousing, that means flexible logistics.
Key Takeaways
- The definitions of fixed vs. flexible logistics
- What it means to complement one logistics model with the other
- How a dynamic approach to logistics benefits retailers and brands
eCommerce accelerated in 2020: 83% of consumers say their online spend will either stay the same or increase post-pandemic, expectations for fast and free delivery continue to rise, and Amazon raised the stakes for what fast delivery means—announcing a multi-billion dollar investment into same-day delivery.
Retailers and brands need to keep up. The world's largest retailers and brands aren't making Amazon-like investments in fixed assets to compete. They operate more efficiently through technology-first solutions. For eCommerce fulfillment and warehousing, that means flexible logistics.
Fixed and flexible logistics models #
What is fixed logistics? #
A fixed logistics model is asset-heavy. It consists of facilities with fixed-term lengths and square footage in static locations—typically predicated on leasing or owning buildings. A fixed logistics model includes long-term investments and is best suited to manage high-volume, complex operations that may require automation and customization.
What is flexible logistics? #
A flexible logistics model is asset-light. It typically comes without term-length agreements, square footage restrictions, or location constraints. A flexible logistics model improves omnichannel operations by extending the reach of eCommerce fulfillment networks, providing rapid retail replenishment, and/or responding to supply chain disruptions and shifting market dynamics.
The differences between fixed and flexible logistics models
| Fixed Logistics Model | Flexible Logistics Model | |
|---|---|---|
| Limitations | Expensive to implement. Multiple contracts and/or partnerships. Not ideal for responding quickly to change. | Not ideal for highly complex operations that require significant automation or customization for unique product characteristics. |
| Strengths | Ideal for businesses that have stable, predictable forecasts. Can support high-volume, complex operations that may require automation. | Ideal for businesses focused on improving delivery promises through logistics network expansion. Beneficial for mitigating future disruptions. Can manage fast-moving, unpredictable forecasts. |
Fixed and flexible logistics models stack up differently. Depending on the business, one logistics model may provide a more optimal solution than the other. But, it doesn’t have to be an either/or decision.
A dynamic approach to logistics—the best of both worlds #
Businesses don’t have to choose between fixed or flexible. Instead, they can complement their fixed infrastructure with a flexible model. A business can use its fixed infrastructure to manage customized and complex needs and use a flexible model to respond quickly to supply chain disruptions.
Benefits of complementing fixed infrastructure with a flexible logistics model #
Positioning goods closer to the end consumers is what makes fast, affordable delivery options possible. Instead of standing up fixed facilities to do that, businesses can employ a flexible model to add new facilities.
Complementing a fixed logistics network with a flexible logistics model removes CapEx and fixed OpEx investments. Instead, retailers and brands connect to a vast network of logistics providers that are transactionally priced. Businesses only pay for what's utilized, which creates lower-risk opportunities to test new initiatives without investing in fixed assets.
A dynamic approach to logistics gives retailers and brands the best of both worlds. Businesses can keep existing fixed infrastructure to support complex operations while adding flexible programs that expand and contract with businesses’ changing needs. By complementing the two models, businesses solidify a long-lasting, resilient supply chain strategy. One that can keep up with future eCommerce demands. One that can stand up to major supply chain disruptions and improve omnichannel logistics operations. One that can ultimately compete with Amazon.
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