THE RISKS OF LOGISTICS

Logistics is a complex process that can be exposed to various risks. Companies dealing with the transportation carry out their risk management plans in the most ideal framework, enabling companies to overcome crises with minimum damage. Making a risk analysis and being cautious against sudden events that develop around certain rules minimizes the risk. Recurring risks occur at regular intervals as a result of incomplete or incorrect functioning of the supply chain.

What are the risks of logistics?

Deficiencies in production, transportation difficulties and poor quality of the product are among the main factors that create the risk. Limak Logistic provides logistics support for companies to be prepared for the risks they may encounter during the operation process. Risks may adversely affect the effectiveness and efficiency of logistics activities.  Logistics companies can also clarify the risk table of their work, thanks to the risk analysis, which is vital for their service areas. In the work done, where is the risk, what is the degree of controllability of the current risk, how much is the profit and cost of the work? Answers to questions such as these make it possible to conduct risk analysis correctly and to ensure effective risk management. In order for logistics service providers to be successful in risk management, they must have established an auditable and measurable system, from the manager to the employee.

Here are the main risks that logistics can face:

• Supply Chain Disruptions:

Interruptions at any point in the supply chain can affect the transportation, storage or production of products. Unexpected events such as natural disasters, malfunctions in the logistics network, strikes, political upheavals can interrupt the supply chain.

• Supplier Risks:

The robustness of the supply chain can be compromised due to suppliers' financial problems, quality problems or reductions in production capacity.

• Customs and Legal Compliance Issues:

It can be difficult to adapt to customs regulations and regulations of different countries. Delays in customs procedures or lack of documents may prevent the products from being delivered on time.

• Transport Issues:

Problems during physical transportation include risks such as damaged products, late deliveries or lost cargo. At the same time, fluctuations in transportation costs and fuel prices can also affect logistics costs.

• Stock Management Challenges:

Excess or shortage of stock can cause financial losses and customer dissatisfaction in cases where effective stock management is difficult.

• Data Security and IT Threats:

Cyber attacks and data security breaches against information systems used in logistics processes can put the supply chain at risk and endanger business continuity.

• Cost Increases:

Fluctuations in fuel prices, exchange rates and other economic factors can increase logistics costs and adversely affect profit margins.

• Sustainability and Environmental Risks:

Logistics processes carry risks related to sustainability due to their environmental impact. Sustainable solutions should be developed for issues such as the use of fossil fuels, emissions and waste management.

RİSK GROUPS

Logistics service providers may face different risk groups during their activities. It is possible to group these risks as follows:

• Financial Risks

• Strategic Risks

• Physical Risks

• Operational Risks

• Natural Disasters, Accidents and Terrorism Events

The first condition of dealing with risks is to be prepared for the crises that the risks will create. This can only be achieved with measures to be taken when the risk has not yet arisen and there is no problem. Change management, political risks, customer satisfaction, e-commerce logistics, merger and acquisition risks, brand reputation are also among the main strategic risks. Terrorism and sabotage, cargo security, cargo damages, damages to third parties, damage management, storage and handling damages, vehicle security, weather conditions and climatic problems are physical risks. Issues such as employee compliance, recruitment, employee safety, IT loyalty, fleet management, contract responsibilities, supplier management, use and management of assets, and compliance with laws are also addressed under the heading of operational risks. And of course, natural disasters and terrorist incidents are among the very important issues that should be evaluated within the scope of risk management all over the world. Let's talk about the risks that logistics companies will face.

Financial risks

In logistics, risk management is of vital importance on a firm basis. In addition to immediate problems, failure to achieve the desired results is also a risk. Items included in the category of financial risks determine the annual profit and loss costs of companies. Logistics firms can anticipate unexpected results with consistent policies they follow in risk management. Management firms that provide services in different types of risk can absorb all situations thanks to analysis. In addition to superficial examinations, a detailed analysis of each risk group ensures the formation of the company's income and expense balance. Under the heading of financial risks, we can count issues such as contract management, credit solutions, financial support from the treasury and liquidity regulation. It is also possible to count liquidity management, treasury risks, credit management and contract audits under the heading of financial risks.

Strategic risks

Risks are situations that arise suddenly under any circumstance. You can be prepared for any situation thanks to the solutions developed against the risk problems frequently encountered by the companies dealing with the logistics business. Factors such as customer satisfaction, purchasing issues, political situations and change management can be given as examples of strategic risk group. Logistics support providers analyze the risks that are vital in the service sector with a table and minimize the losses. Logistics companies aiming to keep current risks under control also add value to companies with profit and cost analysis. Yolda.com, which has specialized employees and knowledge suitable for different subjects, is among the resources to be consulted on risk management.

Physical risks

The methods that facilitate the natural functioning of the logistics process enable to proceed with more confident steps on a financial and sectoral basis. The process, which provides the opportunity to progress transparently, contributes to the process of taking precautions by identifying the damages. Risks that pass through stages such as control, reporting and review affect the regular functioning of the supply chain. Damages to third parties, storage and handling problems, vehicle safety, climatic conditions as well as weather conditions are the most well-known items in the physical risk group. The safe delivery of cargo to the desired locations is also included in the physical risk group.

Operational risks

Directing the stages of risk analysis correctly is an important process that contributes to the formation of the balance of companies. Different methods are developed to move forward using the right programming techniques to achieve the objectives and to eliminate the risk. It is an important detail that the employees to be preferred at this stage are in harmony. Fleet management, contract signatures, IT commitment, recruitment processes and legal procedures, which are among the strategic risks, contribute to the regularity of insurance transactions.

Natural Disasters, Accidents and Terrorism 

When risk is considered in a broad scope, it is a formation that includes more than one subject. Some major factors around the world: natural disasters and terrorist incidents are in the common risk group. Natural disasters, sudden accidents and terrorist incidents have an important place in the risk group with their wide-ranging content. The picture becomes clearer with the risk analyzes that logistics companies conduct at regular intervals. An ideal table arrangement is made by considering the profit margin, level of risk, cost and other factors of the work done.

Logistics managers must create flexible and resilient supply chains to improve the ability to deal with the unexpected. It is also important to use data to strengthen supplier relationships and monitor performance at different stages of the supply chain. Limak Logistic contributes to increase efficiency by providing sufficient support to companies in risk analysis. You can also benefit from different services offered through Limak Logistic privileges in order to make your logistics processes healthier.