The global economy has slowed down due to the COVID-19 pandemic, and experts are fearing that the recession could last a long time.
A silver lining is that many business transactions are expected to happen online with social distancing becoming the norm and the health risk still looming. This means the logistics industry may become more robust than ever.
At the same time, small to medium-sized businesses will be looking at cutting their cost to ensure their survival. Being smart about logistics can help in a big way. And these are the areas you should focus on.
Tracking Inventory
Inventory is the major player in the supply chain logistics costs. Mismanagement will lead to poor forecasting, shipping delays, higher production costs, wasted inventory, and, eventually, lost customers.
However, drastically reducing your inventory can also have bad consequences. As a business you want to make sure that you have enough stock on hand so you can provide timely delivery and ensure continuous cash flow. On the other hand, stocking too much means that you are spending money that could have been better used elsewhere.
Bottlenecks in your inventory simply mean you’re not tracking it well. Using inventory software will make your processes efficient. It will tell you when your supply is running low and you will need to increase your stock, in real-time. You avoid overspending, spoilage, and eliminate the guessing from checking your stocks manually.
Consolidating Shipments
If you’re using carriers for your delivery, you’re dealing with changing rates based on fuel cost, weight, and distance. One strategy to keep cost manageable is to consolidate shipments, you just need to make it clear on your policy when the customers will get their orders. This means fewer trips and you can get better rates from the carriers.
Bigger shipments normally get discounts and these savings will reflect well on your costs.
Single-Sourcing Transport
It’s understandable you will be looking for good rates from different carriers. But if you’re shipping high volumes, you can negotiate the best rates by single sourcing all your transportation requirements.
Call several carriers and request for a quotation or let them bid out for your business. You can explain to the providers about all your requirements and they may offer a customised costing that you won’t get if you deal with different carriers.
Like you, they are looking for long-term business relationships. Most importantly you can gain significant savings.
Using Fleet Management System
If you run your own logistics fleet, then you are managing a high overhead cost. The vehicle’s day-to-day activity is an ongoing expense. Fuel, insurance, the service, and maintenance or repair cost.
You can optimise your fleet’s activity by using vehicle fleet management software. This system can monitor and provide accurate reports on your vehicles, including fuel use and your drivers’ activities. Using this software will also limit delays in the delivery of goods. It will also tell you if the vehicle is up for maintenance.
Running a supply chain business requires accurate monitoring and reporting. Doing them manually may work for small companies, but as your business grows you will need to automate some processes to manage cost and ensure an efficient service to your customers.