For any company that deals with transporting their goods, logistics are one of the biggest concerns that you have. You need to not only figure out the best way to transport your items, but how to do so in a way that is cost effective. If you don’t find a way to run things effectively, the rest of your business is adversely affected.
To that end, it’s important that you occasionally examine your current logistics set up, and look for ways to possibly lower your transportation costs. You may find that your current system is not actually the best way to go forward, and by making a change you can help your business to prosper. Here are a few such changes that you can use to improve your logistics spending by lowering your transportation costs.
Use the Right Number of Carriers
The first thing that you’ll want to look at is the number of transportation carriers that you are using. For instance, in many businesses, they will choose a different carrier for each route that they have. They typically do this because one carrier offers the best price on a particular route, while another carrier offers the best price on another route. You think that by choosing the most affordable option for each route you are saving money, but this may not be the case.
In some instances, reducing the number of carriers that you use will help you save you money. If you can give more work to a smaller number of carriers, they in turn may be willing to reduce costs because of the large volume. For example, let’s say you currently use two carriers to cover two different routes. Carrier One gives you the best deal on Route A, and Carrier Two gives you the best rate on Route B. But, if you give all of your businesses to Carrier One, not only will they bring down their rate for Route B, they can also lower their rate for Route A. You need to consider the estimate rate across all routes when determining the number of carriers to use, not just the rate per route.
Using a Single Source
To take it a step further, you could reduce your transportation carriers down to one. Send out a Request for Quote (RFQ), and see what kind of rates you can get if one company is willing to take on all of your transportation needs. In theory, since you are offering such a large volume of work, you’ll receive lower rates.
Keep in mind however that there is more to picking a transportation carrier than just their rates. You also need to be sure that the company an handle all of your needs. Luckily for companies, there are not plenty of options when it comes to transportation carriers. In fact, a career in trucking is now seen as a stable and great paying job, because of the number of transportation carriers available. So put out an RFQ, see what you get back, and decide if a single carrier source is right for your business.
Once you’ve got the right number of carriers for your business, the next thing you’ll want to look at is your processes. What steps do your products need to go through before transporting? Is there a better way you could be doing things? For instance, are there some processes you currently do by hand, but which you could do faster if you used a computer system? Are there better ways your employees could communicate with one another, or for your company to communicate with customers? Streamlining logistics should be a goal for any company, so if you need some suggestions, here are a few to get you started.
Reduce Number of Shipments
Finally, see if there is a way to reduce the number of shipments that you make. Maybe you could combine routes, or find a new way to package your goods. Reducing the number of shipments will help you to cut costs on transportation, saving your company a great deal of money in the long run.
Make Logistics a Priority
You might think that the amount you currently spend on logistics is the amount you have to spend, but this isn’t always the case. Sometimes by analyzing your current system, and exploring some new possibilities, you find a more affordable way to do something. The above tips will hopefully get you started on the right path, and before long you’ll have reduce the cost of logistics at your company.