Logistics forms the backbone of an organisation that is into distribution, e-commerce or essentially sells & delivers goods. Transportation is an integral part of the supply chain, and every organisation aims to have efficient and cost-effective transportation.
Why is logistics necessary?
Most organisations are directly or indirectly involved with logistics, especially those dealing with products and manufacturing. Logistics play a significant role in the supply chain by optimising physical, informational, and human flows and avoiding additional waste of resources.
High transportation costs can impact the bottom line of a company. Logistics help manage the cost in a dynamically competitive market. In developing countries, the transportation of goods is significantly affected by various factors such as statutory compliances, bad roads or even climate change. Understanding the complexities of logistics and being aware of the best practices considerably helps improve the bottom line.
Reduce inventory holding costs
Managing an inventory can prove to be expensive if not planned. Paying for warehousing, accounting for breakage, shrinkage, and quality control can be costly – especially while adding new products to your growing business. Improve your purchasing and inventory costs by doing the following:
- Plan the right amount for restocking
- Make minimum order quantities work for you
- Avoid overstocking
- Reduce deadstock by ordering the right amount
- Improve supplier lead time
- Have pick up points at the most prominent locations.
- Identify the service level that a customer requires to fulfil their orders.
- Consider a vehicle that is fuel-efficient to reduce fuel costs.
- Consider having a less expensive warehousing location.
- Work on a flexible pricing structure rather than a fixed price model.
Collaborate with suppliers to reduce the cost of transportation
Logistics is an investment in your organisation’s success. Reduce logistics costs to improve profitability by:
Inventory holding costs: Product shrinkage & shrinkage due to faulty stock.
Ensure safety & compliance: Reduce the number of suppliers by evaluating their performance.
Determine the best logistics provider to improve the quality of service.
Using Warehousing Location Strategically
Consider the geographic location that has better access to your employees and suppliers. Develop an efficient network of warehouses by leveraging technology. Utilise technology GPS devices for fleet management.
Optimise modes of transport and routes
Most often, logistics costs have a direct impact on the price of goods & services you sell. Reduce shipping costs by collaborating with suppliers – help them reduce their costs to improve the landed cost. Create a trusted network to share logistical costs. Such actions can go a long way in improving your cost structure.
Improve Your Information Management
The first way to improve your information management is to increase your data capture. We often forget to record important information, whether it is facts or analysis. However, increasing your data capture will reduce the time spent on collecting information. Another thing you can do is improving your security and workflow.
Improve logistics cost-effectiveness by bringing in complete visibility – by improving delivery tracking and your ability to monitor shipments. Logistics has its value, but taking control of it and improving its efficiency is an important business decision.
Above is a list of ways to increase your ROI on Logistics. Being well-versed with logistics will enable you to reduce transportation costs, improve speed & accuracy of delivery, and increase customer satisfaction. Let us know how you get the best ROI on Logistics.