How can you make substantial savings on your logistics costs?

Exploring new ways of getting your parcels delivered could be the answer to reducing your logistics costs.

One of the main goals of any business is to provide high quality customer service to customers whilst making a healthy profit. With a proactive plan focused on optimising transportation management that is well executed can make the difference between excellent customer service, and customers looking elsewhere for their needs. The benefits of a streamlined process for delivering goods includes saving money on transportation costs, faster delivery time to customers, and the ability to use available warehouse space more effectively.

As freight transportation costs continue to rise year-on-year, manufacturers, wholesalers, retailers and any other organisations that are part of a supply chain must think smarter about pushing down the cost of moving goods from A to B.

Given today’s high customer demands and a fluctuating global business climate, companies have to rely on smart logistics management practices.

Poor logistics planning and decision making can also result in excessive expenditures, missed delivery deadlines and damaged goods. This is why optimising operational efficiency and reducing logistics costs are so important. In fact, they should be among the top priorities for any business that does a lot of shipping and hopes to remain financially viable.

What largely affect logistics costs?

  • Fuel costs;
  • Delayed arrivals at ports, leading to higher transportation fees;
  • Complex regulations governing international trade (document processing, compliance checks);
  • Subsequent delivery delays and increased warehousing expenses.

 

So how can we reduce logistics costs?

Consolidated shipments

It goes without saying that shipping goods in FCL (full container loads) is preferable to LCL (less than a container load); it’s safer and more cost-effective. Also, your goods are loaded according to your specifications in a space that is not shared with other vendor goods. Otherwise, you may experience customs delays through no fault of your own.

This being said, there are circumstances when LCL is the preferred and more economical option. Namely, for transporting a relatively small freight, a good way to reduce logistics costs is by consolidating shipments. This involves a combination of several smaller shipments from multiple suppliers sharing the same destination into one consolidated shipment.

Logistics planning and cost saving strategies won’t mean much if you don’t insure your cargo properly. The insurance should fully cover the value of your products to prevent unpleasant surprises.

For example Clicktrans aim to “connect people looking for transport with transport providers who are already making the same route”. The company says that this “new way of looking at road transport” helps to avoid empty running, save energy and money and reduce traffic congestion.Their mission is to support the idea of sustainable and ecological transport. Clicktrans enables users to have a real impact on reducing the amount of CO2 produced.

Additionally, logistics providers constantly importing less than a full load from a certain country can partner up with another similar importer and combine their shipments as a more cost effective solution.

Optimised use of resources

Insufficient use of company assets, such as underutilised fleet vehicles, facilities or inventory, directly affects your revenue. By optimising the utilisation of your assets, including their status (owned or leased), you can greatly improve your business efficiency.

This can be done through rearrangement of the delivery schedules in order to keep the entire fleet of vehicles active throughout the day, as opposed to peak use of the entire fleet in the morning and idleness for the rest of the day.

Also, companies experiencing high business peaks at specific times of the year can rent additional warehouse space when needed. There’s no need to own a huge warehouse that remains underutilised for the majority of the year.

Don’t be too locally focused

Choosing local carriers may not always be your cheapest option. You might be able to achieve a reduction in freight cost by working with some carriers from other regions that deliver into yours. If you can give them a reasonable volume of backhaul work, they will probably offer you a better rate than local firms.

Timely planning

The well-timed planning of operations such as production schedule, shipping routes, and transit time (from pick-up to delivery) is imperative. Hasty, last-minute choices and decisions will likely result in delays and missed deadlines, reflecting badly on both the company image and finances.

Smart planning should also take into account international holidays as factors in shipping schedules and delivery times.

Outsourcing

Over 2/3 of businesses choose to outsource at least a portion of their supply chain operations, mostly transportation and storage. The reasons behind outsourcing mostly include cost reduction, increased efficiency, and the convenience of entrusting important aspects of your work to more efficient and skilled professionals.

To avoid misunderstandings and excessive costs, it’s in the best interest of both the client and the logistics provider to agree on the most important issues. This includes the frequency and size of shipments, specifics regarding packaging, product handling, temperature control requirements, etc.

The effective use of warehouse space

Warehouse space can be at a premium for many large businesses, and a strategic and optimised transportation management plan is the only way to ensure that the warehouse space is used effectively. Keeping the flow of products in and out of a warehouse moving smoothly, saves time and money. The better the flow is controlled, the less warehouse space that will be needed. Getting products in and back out the door on to customers is the most effective use of time and space. The less warehouse space that is needed, the lower the overhead costs are for the business.

Technology

Lastly, for companies to reduce logistics costs further, they need to consider automation by using a Warehouse Execution System (WES) combining WMS and a Warehouse Control System (WCS). Regulating, automating, and optimising manual processes can reduce staff requirements, centralise production operations to lower-cost areas and create a more proactive approach to ensuring customer satisfaction. With an automated, cost-effective transportation and logistics system, a company can implement major strategic changes to provide visibility, reduce costs and increase customer service levels.

About us:

Speak to one of our team to understand how Clarus’ WMS system can cost effectively support best practice warehouse management processes, better customer service and highly efficient working for a range of warehouse operations with pay per month options and no IT infrastructure needed.

Our platform can scale from a one user, small depot system to a 100’s of user distribution centre operation. The ClarusWMS platform will cost effectively scale with your business based on demand.

ClarusWMS is a UK based supplier of warehouse management solutions with a wealth of industry experience in third party logistics, wholesale / retail distribution, online fulfillment and manufacturing warehousing.

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