Growth brings challenges in the company's logistics

As a company grows, it faces the challenges of change that growth brings, which it tries to manage. Managing these challenges is key to the company's continued growth and success. Change challenges have been studied from the perspective of different aspects of the company, such as supply chain, finance, and production. Logistics is one of the key processes and management areas for a company. Despite its importance in business, its problems during growth have not been studied much.

In my thesis, I set out to investigate, through a literature review, the growth of a company, its management and the logistical factors that influence its success. Through the literature review, I identified five key challenges to change in logistics. The review also revealed the scarcity of scientific literature on the topic.

Designing and applying logistics strategy to business

The review highlighted a lack of application of logistics strategy to the business by top management, which treats logistics as an isolated area and too many activities. The logistics strategy may also be designed to be inappropriate for the business, resulting in inconsistencies with other objectives, plans and policies. To overcome this challenge, companies should integrate logistics into their business and develop coherent plans and strategies for its development.

Process development

Business growth also brings challenges for processes. As the business expands, the challenges may manifest themselves, for example, in the development of individual, disconnected processes without a clear plan or alignment with the business or other development projects. This leaves staff to put out small fires rather than tackling the root cause. As a company grows, it also needs to consider process flexibility and standardisation. Growth and its pace are usually difficult to predict accurately, and a company should monitor its processes continuously. Standardisation tends to reduce costs, while flexible and transparent development tends to lead to higher responsiveness. Creating a clear plan and overview will help the company to better understand its development efforts.

Maintaining high customer satisfaction

The challenge of customer satisfaction is reflected in the uncontrolled growth of operations, which is affecting the reliability and timeliness of logistics delivery and the quality and speed of customer service. These contribute to a declining level of customer satisfaction, which is reflected in a decrease in profitability. To manage this challenge, companies should put customers at the core of logistics and aim to achieve and maintain high customer satisfaction by minimising non-value-added transactions in logistics value chains.

Utilising information technology

Inefficient use of IT leads to a loss of time and competitive advantage. Growth has put the company in a position where it can no longer continue with its old IT methods if it wants to continue growing. As a management strategy, the company should invest in IT and start training or hiring staff to use it more effectively.

Change management

Growth poses significant challenges and problems for logistics managers, especially at middle management level. Rapid growth gives them much more responsibility than they are used to or trained for. Old practices and methods cannot be abandoned or developed at the speed required by growth. This results in chaos, which affects the management of logistics and the quality of decisions. To overcome this challenge, the company should consider hiring a professional to manage the change processes or hiring staff to support managers. Old methods should also be developed or, if necessary, replaced by new ones.

The challenge of the thesis was limited literature on the topic

The limitation of the relevant academic literature of the topic provides challenge for the thesis. The challenges of logistics during growth had to be interpreted and separated from the supply chain context. The scarcity of sources on the topic indicates the need for further research. However, the work succeeded in its objective of collecting the key issues in logistics in the growth phase. The work provides a quick-reading, compact information package for those interested in the subject.

Author: Joona Ellola, Bachelor Student, Industrial Engineering and Management, University of Oulu


Martti Saarela, Ph.D. (Tech.), LL.M, M.Sc. (Econ.), Development Manager, University of Oulu Kerttu Saalasti Institute

Jukka Majava: D.Sc. (Tech.), Assistant Professor, Industrial Engineering and Management, University of Oulu

Ellola, Joona, 2024: Yrityksen logistiikan muutoshaasteet kasvun aikana. Oulun yliopisto. (In Finnish)