Logistics plays an important role in corporate management. Through control and execution planning, you can optimize this area’s processes, reduce its costs and increase your profitability. However, seeking to make your logistics efficient implies some costs that often discourage businessmen from investing in this area.
In this article, we’ll present 6 ways to reduce your company’s logistics costs. Take a look!
1. Rethink your delivery routes
Program your delivery routes more intelligently, considering a number of variables – such as, for example, whether there’s an intense flow of deliveries to the same region. Rethinking your routes will offer your company savings, because it will help identify less expensive practices, as well as errors and unnecessary spending.
2. Analyze the performance of your equipment
There are several pieces of equipment that are mainly used in handling and storage, such as forklifts, pallets or conveyor belts. To reduce your logistics costs you need to constantly evaluate the performance of these items to identify bottlenecks and excess workloads that can make your processes more expensive.
3. Choose the best form of transport
To opt for the most appropriate form of transport, you need to take into consideration factors such as the distance traveled, the volume of products to be delivered, and the cost of each means of transport, among other things. This will allow you to substitute rail for air in the case of closer deliveries, for example. It’s also interesting to evaluate alternative forms of transport, such as motorcycles or bicycles. They can often be more appropriate for your purposes.
4. Bet on technology
Investing in technology brings good results over the long term. If you decide to outsource, bet on companies that offer high tech solutions. You should also use computer systems in your own business. To control logistics costs, cost control software is recommended. Doing this can even improve the quality of the products and services that your company offers.
5. Use appropriate performance indicators
Key Performance Indicators are essential for any operation. It’s no different with logistics. You need to identify which points need to be evaluated and then choose the best performance indicator for each one. With the correct KPI, you can improve your resource management and reduce extra activities and thus your logistics costs.
6. Focus on optimizing storage systems
Storage is still expensive for managers. It’s more important to use your space intelligently than increasing its size. Rethink your storage area layout, invest in systems that will help you manage your stocks and seek ways to reduce your stocks such as demand forecasts. This way you can optimize your storage process and reduce your costs.
Logistics costs involve storage, handling and distribution. These processes are fundamental to the proper functioning of your business. That’s why it’s important to know ways to reduce your logistics costs without harming the quality of your company’s services. Thus you’ll be able to improve not only your rate of return, but your customer service as well.