How to Optimize your Business Process Inorder to Reduce Logistics Costs?

With the increase in the number of online businesses, the demand for logistics solutions has taken a huge leap. With the big brands outsourcing their logistics services, it has turned into one of the largest revenue generating industries.

With this being said, the same companies are on their way to reducing transportation costs while maintaining the efficacy of their services to customers and clients. The reason why reducing transportation costs and cutting down logistic expenses is highlighted to this extent is because transportation is actually one area of a supply chain management environment that can be controlled in a feasible and cost-effective manner. Focusing on reducing transportation costs will serve as a win-win situation for both the client and your business.

The logistics services are responsible for everything covering “what”, “where” and “how” to deliver. And therefore, an efficient supply chain is deemed to be the backbone of any affluent logistics service, while at the same time, over-paying for the required efficiency is unnecessary. Apparently, with a few cost-cutting strategies for reducing transportation costs, logistics services can indeed generate huge profits with decreased investment. So to facilitate you with such cost-cutting measures, here is the list of few tips on how to reduce logistics cost while effectively maintaining the quality of service:

Logistics Costs

Eliminate the factors that vary the delivery time

The variation in the transient time is often compensated with higher inventory and warehouse stock which corresponds to higher rents. This additional cost can be easily reduced and avoided by eliminating the variability. It can be done by gaining a reliable insight into the future orders with the help of visibility software. Thus, this information would cut the size of inventory and facilitate the timely delivery.

Avoid detention fines

These bills may not effect initially, but gradually they add up to a huge sum. So keep a track of all your shipments and take into consideration the repeated fines with their reasons. Such slight changes can save a huge amount of money in the long run.

Focus on full coordination

If a huge number of items are to be shipped from a country then it would be beneficial to store and confine the goods within one container whereas if the number of items to be shipped is less, it would be cost-effective to collaborate with another logistics service. This would hugely reduce the shipment cost while increasing the chance of timely deliveries.

Over-expenditure on insurance

Most of the companies are self-insured while the carrier insurance is covered by the policy. So, avoid wasting money on extra carrier insurance as we tend to buy this extra carrier insurance on the shipment of the premium goods. So before going for an extra insurance cover, go through your self-insurance policy and opt accordingly.

Control shipping costs

We always end up overpaying n for the express shipping. So in order to avoid it, divide the goods that are to be expressly shipped and those which can be shipped normally. Proper calculations and timely estimations can effectively help you in figuring out the right amount of the goods that are to be shipped immediately. Avoiding stress and confusion is the key here.

Timely planning

Though it is one of the most regarded and followed tips on how to reduce logistics cost, more often than not we fail to comply with it. So to effectively reduce the expenditure, plan well ahead of time. If you have to ship a consignment overseas, then timely book the air, water or rail services as the last minute bookings are always expensive. In addition, timely planning of tasks leaves you with an essential time to look out for other consolidating services, which can further reduce the shipping cost of your logistics solution.

Outsource your stress

You can hire companies to streamline your business’ logistics and supply chain management processes. Outsourcing such tasks to third-party service providers and professionals will drastically reduce your work pressure and you can focus better on other activities of your business. Sometimes, it is best to leave complex tasks and logistics procedures in the hands of a professional, as it doesn’t just save you costs, time and money, but also ensure consistency in the supply chain of your business.

Optimizing your resources

Consider optimizing your business reduces the next time you are wondering about how to reduce logistics costs for your company. Insufficient and mismanaged use of company assets such as underutilized fleet vehicles, facilities, and inventory directly affects the revenues of your company. For example, you can rearrange delivery schedules to keep the entire fleet of vehicles active throughout the day, instead of operating the vehicles for a specific time of the day and keeping it idle for other periods.

Conclusion:

The conclusion is pretty straight and simple. Reducing transportation costs while effectively streamlining your company’s logistics and supply chain is not rocket science. With a few cost-effective tips on how to reduce logistics costs such as the above, you can effortlessly continue to enjoy the profits while keeping the logistics costs as low and feasible as possible for your business.