The cost of logistics and supply chain is a critical component of the total expenses for any company. The more efficient your supply chain is, the lower the costs will be. It’s a huge contributor to your bottom line, and it can be difficult to manage. But it’s important to make sure that you are taking steps to reduce these costs. In this article you could learn how to reduce supply chain cost and logistics cost.
In a recent survey of over 1,000 professionals working at companies with more than 500 employees, 72% were not aware of how much their supply chain and logistics costs were costing them each year. This is surprising because it’s a critical aspect of running a business. The same survey also found that 44% claimed that they don’t have access to the data they need to know what their supply chain and logistics costs are so they can plan accordingly.
Read on to find out some ways that you can reduce your operating costs by making your supply chain and logistics practices more streamlined and effective.
Improve customer satisfaction
The first step to improving customer satisfaction is to ensure that you have a solid customer service organization. If a customer has a bad experience, he or she is more likely to share the story with others and fewer of them will go back for more business.
In addition to having a good customer service organization, it’s also important to have an efficient supply chain and logistics system in place. Having everything in line helps reduce costs and improve productivity by reducing the amount of time spent on mundane tasks such as paperwork and waiting on deliveries.
One more step to improving customer satisfaction is to make sure you have a good product. If you do, then you can focus on the next step: making sure your customer is happy with it.
That means ensuring that the product is what they want and that they’re getting what they paid for. You should also check in with them regularly to see if there’s anything else they need or if there’s anything else you can do to help them.
If you’re already doing this, then great! It means that your customers are already satisfied, so all the work has already been done! You just need to keep doing what you’ve been doing and make sure that it continues to satisfy your customers’ needs.
Improve transit timelines
Logistics costs are the cost of transporting goods between a supplier and a customer. The more time it takes to ship an item, the more expensive it’ll be to move. This is because time is money, and shipping companies charge accordingly.
But with the right strategies, you can minimize travel time and make sure that your goods get from A to B as quickly as possible. Here’s how:
- Use e-commerce fulfillment centers
- Use ULDs for shipping small packages
- Hire a third-party logistics (3PL) company to handle your freight
- Minimize transportation costs by using air freight or sea freight
The average distance traveled by a product from its point of origin to its point of consumption is about 4,000 miles. The distance between the factory and the customer’s door is less than half that, but it can represent up to 10 percent of total supply chain costs.
According to the U.S. Department of Commerce, logistics costs in the U.S. are estimated at $1 trillion annually, with another $850 billion spent on freight movement within the country and another $400 billion spent overseas for exports and imports.
The most common strategy of how to reduce supply chain cost is consolidating shipments across multiple carriers and vendors. This can be done by using a network of contract carriers or a single point of contact with the carrier.
A network of contract carriers allows you to take advantage of volume pricing on freight and warehousing services, which helps to reduce your overall costs and improve cash flow. The downside is that you need to manage multiple contracts with various carriers and vendors, which can be difficult for small businesses.
A single point of contact with the carrier allows you to consolidate shipments, exposure, and risk from multiple contracts. This allows you to focus on managing your contracts and getting the best price possible from each one.
A lot of companies are looking to reduce supply chain and logistics costs by consolidating their shipments. The idea behind this is that by consolidating your shipments, you can reduce the amount of inventory that you need to store and manage. That means less space for items, fewer inventory costs, and less time spent managing all those things.
Use data-driven decisions
You can use analytics to reduce your logistics costs by identifying where you are spending money, and why.
You’ll want to identify where your company is spending money in order to figure out what areas could be improved. You can do this by looking at the data from your supply chain or logistics processes.
Look at how much it costs to get that part of your product from A to B. You’ll need to know the cost of shipping, handling, and packing materials, as well as any other fees associated with the process (such as customs fees).
You may also want to look at which parts of the country deliver the highest volume of goods — this will help you decide if you should have more distribution centers in certain areas of the country.
Reducing supply chain and logistics cost
There are many ways that you can reduce logistics costs and therefore improve how you run your business. One effective way not mentioned above is to consider outsourcing your logistics services. By doing so, you can partner with a reliable company that is an expert in the logistics field and can help you gain more by spending less.
You can talk to us here at Soul Logistics to know about how we can help your business propel forward by reducing your costs in moving your products. We are experts in the field and we are always ready to help fellow business people.