Post Date : January 8, 2020
Poor logistical planning can result in increased costs, damaged goods, or missed deadlines. All these are no-go scenarios for any company. If you want to reduce logistics cost for your organisation, you need good logistics cost reduction ideas. And that is exactly what we will discuss in this article.
1. Automate Logistics
One way to cut costs like warehouse costs is by automating the logistics. Regulate, automate, and optimize the manual logistics processes as much as possible. Automation will reduce staff requirements and centralize production operations. It makes the shipping process accurate and quick, regardless of the shipment volume.
Cloud technology has made automation of logistics affordable and easier. Automation is also linked to higher customer satisfaction. It reduces the per order cost of logistics support, which enables you to lower the price of the product. This will make your customers happy. You can spread out the cost of logistics support over a greater number of orders per customer.
2. Identify Fixed and Variable Costs
You must have a clear understanding of fixed costs and variable costs.
Variable costs are those that fluctuate with volumes such as labor, fuel charges, or packaging. Fixed costs are those that do not vary with volume. The costs of electricity and management are mostly fixed unless there is a variable component like an extra shift.
When you know exactly how much money is being spent on each area, you can decide which variable or fixed cost you can cut.
3. Team Up with Other Shippers
Do you frequently have less-than-truckload (LTL) shipments? If yes, that would translate to higher logistics as well as transportation costs. One way to reduce these costs is by teaming up with other shippers.
Consider collaborating your loads with shippers that are moving their loads to the same locations or customers. This will turn your LTL shipment to low-cost, full truckload shipment. This tactic will help you cut road, rail, or air freight costs.
4. Outsource Parts of Supply Chain
Do you outsource any part of your supply chain? Outsourcing even a portion of your supply chain like storage and transportation will reduce costs. It will also help in increasing efficiency and reducing logistics costs.
Moreover, you would know that professionals are handling your logistics and supply chain processes. This would minimize any kind of stress on your end.
Before outsourcing, ensure that both you and your logistics provider are on the same page. Discuss the size and frequency of shipment, product handling, temperature and pressure control, etc. This will ensure smoother operations.
5. Improve Inventory Accuracy
Are there more goods in the inventory than required? Or you don’t have enough to meet customer demands? In both cases, you would lose money. Keeping out-of-stock goods will cut into your profits. Contrarily, paying for inventory space and transportation for low inventory will impact your costs. Make sure you have the right size of inventory to prevent losses.
Another way to improve inventory accuracy is by using industrial scales like floor weighing scales. These weighing scale systems provide reliable and repeatable weighing of goods. This ensures precise billing and inventory records.
Implement scales like counting scales, warehouse scales, forklift scales, and bench scales in your facility.
6. Consolidate Shipments
When you ship your products, the shipping charges will depend on factors like weight and distance. One way to reduce logistics cost is by consolidating shipments. In simple words, consolidating shipments means placing smaller packages into one big box. This will result in fewer trips, thus saving your money.
Weight management is also important while packaging because the higher the weight, the higher the shipping cost. Hence, scales play an important role in consolidating shipments. Use industrial scales like floor weighing scales to weigh consolidated shipments. Accurate weighing means you will be charged accurately for all your shipments.
This is one of the most effective freight cost reduction ideas.
7. Provide Transparency
Increasing supply chain transparency will build trust with your customers and stakeholders. You get better visibility in all aspects of the supply chain, which will enable you to drive improvements.
You will also be able to react faster if any problem occurs. And when you react to problems before they get worse, you will save money. Imagine how much you could lose just because you couldn’t spot a problem at the right time!
Implement tools like warehouse and inventory management and logistics management software and apps. These tools won’t just save money but also enable you to plan your operations efficiently.
Let’s Wrap Up
It is possible to reduce logistics cost by making some tweaks in the logistics processes. The right tools and technologies like industrial weighing scales will save you money. Identify the areas where you can make the necessary changes and implement them.
This article is authored by Kevin Hill. He is the content editor and online marketing manager at Quality Scales Unlimited. Kevin combines his technical knowledge with content marketing in creative ways to give Quality Scales Unlimited a competitive edge.