Logistics is a fundamental part of any business. If you don’t have the right logistics providers, you might not be able to get your products to the right place on time, which can lead to declining sales. It’s important for every business owner to know the benefits and drawbacks of their current logistic carriers so they can make an informed decision about their next provider. In this article, we’ll look at how logistics vendors affect your business and provide some strategies for reducing costs.
Logistics and the Importance of Carriers
A big part of running a business is keeping your inventory stocked and on hand at all times. However, doing this can be expensive, so it’s crucial that you make an effort to avoid delays.
If your items are late, you can lose your customers, so having the right logistics provider is critical. Logistics and your company’s daily operations rely on timely deliveries, so you need to make sure your carrier is delivering to you on time.
You also need a reliable carrier, and if they mess up, they can make your job hard. As a business owner, you need to make sure you’re getting what you pay for.
The Advantages of Good Logistics
Logistics can be a complex area of business. Some businesses simply don’t require a lot of their own logistics to run, so they’re happy with a more one-on-one service from a logistics provider. This can be very beneficial. There are benefits to both companies that make this possible.
For example, a logistics company provides a provider for companies with logistical needs that aren’t obvious or require a high level of expertise to address. In other words, you probably don’t have to worry about things like how to ship computers that you don’t know how to handle, or how to send anything from Asia to the United States. You might have a specific need that needs to be filled but you don’t know how to service it.
When your company needs a shipment, you need a lot of moving parts, from people to resources to vehicles and everything in between. While a freight forwarding company handles your shipment from one place to another, they also have to collect the necessary logistics to deliver to the locations you need to deliver to, such as customs and tax compliance. A logistics provider has to deal with all of the necessary supply chain functions, which can lead to savings in the form of reduced costs and reduced inventory needs.
A good logistics provider is going to offer you a great value for your money. To make sure that your business can pay for the good service and efficient delivery times, you need to know where your costs are going.
The Disadvantages of Poor Logistics
For businesses that rely on good logistics, poor service is only going to cost you money. If your logistics provider is not responsive to you and your business, it can lead to customer dissatisfaction and losses in revenue. But if your carrier doesn’t deliver efficiently and quickly enough, it could mean wasted time and staff hours. Other drawbacks of poor logistics include poor customer service, long wait times, and long delivery times.
Strategies for Reducing Costs
Let’s take a look at how carriers can impact your bottom line. As a business owner, you should always ask yourself if there’s an alternative route you can take that doesn’t rely on the carrier. There are several ways that companies can avoid spending a lot of money on freight.
Sometimes, service fees are the best alternative for businesses, since they cost a lot less and offer better service than express mail fees. An expert logistics service provider like FedEx will calculate the time that’s necessary to deliver your product to its destination and charge you accordingly. Other companies will use different carriers, some of which are fixed cost carriers, such as UPS or DHL.
One of the best ways for companies to reduce costs is by automating logistics providers’ processes. You can easily control transportation fees and expenses by having a workflow process in place to automate when and how your carriers move packages around.
A company may have a carrier pick up a shipment at one location, and they might be able to handle it in one day. On the other hand, a carrier would have to transfer the shipment to a different carrier, return to pick up another package and then return to the original place. This leads to multiple trips, delay in loading and unloading and additional stress on the workers. By automating the carrier’s workflow process, they can get the job done in one go.
Manual order fulfillment
Of course, not everyone has the time or expertise to choose a fulfillment service. For those who don’t know exactly what they want, manual order fulfillment is a great way to reduce costs, and one that many companies turn to. With manual fulfillment, you’ll have your order shipped to you in a cardboard box. It may be filled with products that aren’t completely compatible with your brand, but that’s what you get with a manual fulfillment company. However, there are a number of challenges with this method. First, there are additional costs related to returns and damaged products. Plus, the entire process of manual order fulfillment can take longer and take you away from creating more marketing materials, which can reduce revenue.
If you want your product to arrive at its destination in a timely manner, you have to be willing to pay for overnight shipping. If you can’t afford this type of service, you’ll have to use an alternative way to get your products to the right place at the right time.
If you already use a delivery service that carries heavy packages, such as UPS or FedEx, you might want to take some extra steps to cut down on your logistic costs. Rather than bringing your items to a local post office, you can let your carrier deliver them to the nearest post office that serves your area. If your items need to be processed at a post office, you can do this yourself by checking to see if there is an option to send your packages by mail.
Consolidating orders
One of the best ways for your business to reduce costs is to consolidate their orders. For example, if your business has different carriers for different routes, it might make sense to switch carriers for one particular route to reduce costs. You might also want to consider using a single shipment for your business’s domestic orders, which could reduce delivery time.
It can be hard to know which carriers are the best in their field. There’s an abundance of information out there, so you can easily find information about the cost and quality of different companies. But in the end, your decision will depend entirely on what’s best for your business. If you’re looking for costs, you should use some sort of comparison website.
Logistics can be expensive if you have too many deliveries per day or per week. In some instances, you might need to consolidate orders if you want to reduce the cost. When you consolidate your orders, you’ll reduce your capacity to transport. However, you might still be required to meet the number of orders you have because you won’t have the resources to spend on transportation for each one.
To consolidate your orders, you need to reduce the volume of each one. You can’t cut back too much. That way, you still have the capability to meet all of your customers’ demands, but you won’t be wasting as much money as you otherwise would.
If your suppliers require you to take on larger shipments, that might be a problem.
Shipping to a hub
The first thing you should consider when you’re looking for a new logistic carrier is whether you’re shipping your goods to a hub or directly to your customer. Hubs are the primary drop-off point for goods, so they’re important for companies that may need to ship a variety of goods to multiple locations. Logistic carriers are required to drop off their packages at a hub and then follow the route to their final destination, so long as they still reach the destination within the prescribed time frame.
In contrast, if you’re shipping to a customer, they are responsible for the packaging, shipping and handling.
Conclusion
Logistics can be an extremely expensive problem for most small businesses. With a little bit of planning, you can reduce your costs and pass them on to your customers by investing in these key strategies. It might take some trial and error, but the results will more than pay for the effort you put into it.
