How to Create an Ideal Risk Management Process for Your Logistics Company

Due to the fast-paced growth of the on-demand and e-commerce markets, there is bound to be disruptions in the supply chain and logistics of companies as they try to keep up with the high demand of the growing market.

To avoid financial losses and customer dissatisfaction, companies have had to employ certain risk management practices to avoid the day-to-day glitches in their systems.

Before actually utilising any risk management processes, it is important for a logistics company to first recognise its risks and shortcomings. This way, they will be able to ideally rectify any issues that they may be facing. The company has to start by doing a risk assessment and analysis, determining what uncertain events or situations it might face according to the market, climate and social/political environment it operates in. With this knowledge, it must estimate the financial and reputational damage these situations might have on the company.


Logistics graphs and analytics

Following this, the company should perform a risk evaluation to determine how to prioritise potential risks. The less likely and merely inconvenient risks should be put last, while impending, potentially catastrophic risks need to be dealt with first.  Next, the company needs to put certain practices into place to eliminate them; though social, political and environmental risks cannot be eliminated, systems can be put into place to monitor and manage them if need be.

Common risks that most logistics companies usually face have simple solutions that can be put into place to ensure they do not have detrimental effects on company. Following are the most common problems and their solutions for logistics companies:

Inventory Management

It is all too often that a logistics company will have badly managed inventory and space, especially because of the growth in the demand for the e-commerce industry. Weak planning and a failure to forecast the spatial needs of goods for retailers can lead to over or under-stocked warehouses. This costs logistics companies money and time, and should be addressed immediately.

The solution is to have an inventory tracking and predictive analytics system in place that integrates your storage facility to your supply chain. A constant check on inventory is an absolute necessity; this will ensure that companies can predict the need for stocking at exact locations without any disruptions. On-demand space can also solve problems of under-stocked warehouses by giving the chance to occupy unused shelve space on a short-term basis.

Warehouses can use platforms such as LogistCompare to generate extra revenue from unused shelf space; business looking to rent short-term or smaller stocking needs can find the space easily on the same platform.



With delivery systems, logistics companies fail to factor in bad routes and environmental factors. It is important to be aware of inefficient routes; with road work or natural causes, a simple GPS and route tracking system can save the company time, fuel money and help keep customer satisfaction for e-commerce retailers. Efficiency practices on last mile delivery can lead to the cost of delivery being driven down, and the likelihood of e-commerce customers opting for same-day delivery – what this means for logistics companies is a higher satisfaction rate and more clients.

Supply Chain Management

Often, lack of communication and big gaps in the company hierarchy structure can lead to mismanagement of the supply chain, in turn adversely affecting logistics processes. This mismanagement can often lead to risks being overlooked, and a bottleneck in the decision-making process. A good communication software or logistics policy can streamline the decision-making process and help manage risks as they are identified on any level of the company structure.

There are also risk management professionals and apps that can help your company get a system in place. These professionals usually have in-depth knowledge about the market, giving your company the best possible solutions according to the market, while the apps have many features that can help you customise your business and the risks it faces.