5 Ways to Reduce Logistics Cost
Along with an increase in customer demands, the logistics business is on the rise. However, the whole process of moving the goods becomes costly for some companies and their budget suffers. Lack of considerable decision making in the business process causes excessive spending. That is why good strategies on reducing the cost of your logistics are essential, so you can continue to carry out quality services without compromising your budget. Here are five ways to minimize your logistics process costs and save money for your business.
1. Consolidate Shipments
Consolidating shipment is combining less-than-truckload (LTL) shipments into one truckload (TL) shipment. TL shipments offer faster transit times as the truck only has one destination, and it never stops aside from driver rest breaks and fuel loading. Consolidation of shipments allows you to combine smaller shipments traveling in the same destination into one shipment, paying only the space that your parcels take up. You can network to another supplier if you both have less than a full-load shipment and combine it for a cost-effective solution.
2. Multiple Warehousing
Consider multiple warehousing if you do a lot of shipping over long distances. When calculating fees, base the amount on the distance from the warehouse facility to the customer’s location. Therefore, rate charges are higher for further areas. So, having a warehouse closer to your customer’s location can reduce transportation costs. Instead of creating one massive warehouse, it is efficient to invest in multiple warehouse spaces if you have a high order volume. Take the case of Amazon, for example. Amazon has more than 175 fulfillment centers across the globe to accommodate its millions of customers in different countries.
3. Use of Technology
Technology offers numerous ways not only to increase productivity but also to reduce costs in a logistics business. Consider automation through a Warehouse Management System that facilitates management in the organizing and controlling process and movement in a warehouse. You can also try to automate trade compliance where logistics managers can monitor changes in the compliance process across global shipping sites in real-time. Trade compliance automation speeds up document preparation and avoids border crossing delays. Invest in technologies that can improve your business process. There are inventory management, logistics management, and supply chain management software that can enhance your business productivity and can minimize costs.
4. Optimizing Warehouse Spaces
Warehouse space can be costly. Use your space wisely by determining the right storage layout to use the area effectively. Invest in systems that can help you manage the flow of the products in and out of the warehouse. You can as well opt for systems that manage your stocks since the more product stuck in your storage, the more area you need. Analyze what products sell quickly and what are those who don’t sell as much so you can scale what to restock to need less warehouse space.
Among the advantages of outsourcing is reducing costs. Hiring in-house agents cost a lot, especially for short projects, than outsourcing a team to manage the work. Additional employment costs in hiring in-house employees include training, benefit packages, and equipment. In outsourcing, aside from getting access to the latest technology and software in the logistics operations, you get a team of experts that will provide quality service to your customers.
Outsourcing gives you staffing flexibility where you can only pay for the services you consume, and you can scale up when you need additional agents or scale down when your business slows down. There are outsourcing services that you can take advantage of for your logistics business apart from the delivery, transportation, and warehousing that can also contribute to the overall efficiency of your business.
Reducing operational costs while maintaining excellent service can be challenging. Moreover, optimizing your logistics business might be difficult, but with the right process and excellent support team, you can reach success. Talk to our experts if you wanted to start managing your supply chain effectively by outsourcing a support team for your business.