Logistics is typically one of the most expensive aspects of a business due to the vast resources needed to transport goods across states, countries, or even continents.
It will usually involve you buying or hiring heavy goods vehicles, planes or boats to haul the products from your storage facilities to the end customer, as well as the cost of storing the goods at various depots, hiring highly trained staff to complete the loading and unloading process and paying suppliers to deliver the constituent parts in the first place.
This makes it a huge drain on your finances, which can become problematic if your cash flow is inconsistent.
To overcome this issue, it is vital that you find workable methods for reducing your logistical spending. You could, for example, try and reduce the chances of an accident from happening to one of your drivers, thereby reducing the cost of accident damage or delayed orders.
Moreover, you could outsource certain transport links or even invest in specialist tools or equipment that can save time (thereby allowing you to process more orders).
This is how you can make a cost saving on logistics:
Cut down on the cost of accident damage
When trying to reduce the cost of your corporate logistics, you might imagine focusing only on major elements like the price of new trucks, how much fuel it takes to take a boat across an ocean, or the rent of a storage depot.
Although these are fundamental parts of your logistics network and need to be addressed, the obvious areas are not the only details that can be optimized to save money.
For example, few businesses consider the cost of an accident on their fleet.
If one of your trucks is caught up in an accident on a highway, you will likely incur eye-wateringly expensive repair bills, a potential dent in your insurance premium, and the cost of replacing any damaged products.
Not only this, but you will probably have to refund customers who never received their products and delay further deliveries while your fleet is down on a vehicle. This is not to mention the human cost that accidents can cause, which is always unacceptable.
Therefore, you should install technology that reduces the chance of accidents – such as lane departure warning aftermarket. This will help drivers anticipate potential incidents on the highway.
Be flexible with your transport options
Another effective way to reduce your logistics cost is to remain fluid with the transportation type you use on each delivery. While it can be easy to fall into a routine when creating a supply chain, you should not presume that a certain transport option is right just because you have always used it.
For example, delivering goods via freight train is usually cheaper than the alternatives – which could be a compelling option if you are transporting products across the country.
What’s more, you could combine different modes of transport to receive the most cost-effective results.
Invest in specialist tooling to improve efficiency
Having the right tooling and machinery in place can save you a significant amount of money in the long run – even if it is more expensive in the short term.
For instance, you may want to purchase forklift trucks or fit tail lifts to your lorries to ensure that each order can be processed quickly – and the minimum number of staff is necessary to complete each task.