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Cost Reduction Techniques in Logistics

by | Sep 16, 2021 | News & Updates | 0 comments

Do you want to know some tips to reduce your freight cost in your courier service? Do you want to know some effective ways to minimise your fees? Is freight an important sector of your business? 

If the answer is yes, chances are the charges will continue to rise throughout the whole of the transportation logistics. In addition to this, aside from the regular machinery and fuel that are increasing, suppliers may face tons of pressures in terms of budget.

The number one priority for most companies is to lessen transportation logistics costs. Moreover, there are many ways to optimise chain procedures, improve transportation costs, and save budget for businesses.

When talking about strategies for lowering logistical expenses, it can range from different factors. Some of these are providing valuable processes, changing more innovative shipping networks, enhancing relationships between suppliers and third parties, streamlining inventory levels, etc.

A technique to lessen logistics costs is to value your customers. You have to put in mind that your customers are the reason why you’re here. You have to listen to them and treat them well. Then, profit will follow. We’ve compiled this list of cost reduction techniques to help you in your logistics courier services in Australia:

1. Be creative – don’t depend on single modes

If you have the qualities of being adaptable and flexible in your transport modes, it can significantly affect your offset losses. Even though you may not realise it, it will help you in ways that you may not expect it to be. Usually, freight shipping by air is more expensive than by sea. However, you can’t risk the time it would take for it to arrive. It could even cost you sales.

Research and look at transport costs for different modes. Don’t worry about making a switch if it’s really needed. Another option available for you is intermodal transport. If you haven’t considered this before because you’re used to depending on single modes, you can take a leap and try this.

What’s considerably cheaper than trucking is rail transportation. This serves as an exceptional combination and could be the answer to staying within your budget and on time. You can support the flexibility of the mode by reducing the usage of more costly shipping options.

In some instances, your customer only needs a portion of what you ship as soon as possible. You will most likely speed up the shipment for a full load. At the same time, you can dispatch the freight that has to get there immediately. Utilise cheaper modes for the extra portion of the shipment. This way, you can also lessen the costs.

2. DISCOVER SHIPPING CONSOLIDATION PROSPECTS

There’s an economical choice for small weights; they are called Less-than-truckload (LTL) shipment. Furthermore, you can opt to consolidate the shipments of different items or products for all customers into one shipment. As a result, you would save money using full load shipping (FTL).

3. Consider warehousing services

Often, there will come a time when you will ship a lot of goods from a certain point to another, especially over a long distance. But you have the option to keep the products nearer to your customers and consider warehousing services. Thus, significantly bringing down transport costs.

First and foremost, you must be familiar with security considerations. Aside from making sure that the warehouse operation is secured, be safely proactive. Do the best you can to avoid costly injuries. As much as possible, avoid dealing with government fines.

If your security problems exceed their limit, the operation can be stopped anytime by the government. A way to handle this is to have a safety manager who would be responsible for organising ongoing safety training. Most importantly, the safety manager is accountable for overall safety.

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4. Minimise labour costs through an automatic container loading system

Perhaps one of the most recommended methods to avoid product damages, minimise labour costs, save production costs while being more productive is through an automatic container loading system.

Determine the decrease of labour for your warehouse operation. Each project should highlight the labour costs. That’s why labour management software systems exist which can help manage the work when it comes to the warehouse.

On the other hand, you can have incentive programs for your employees in the warehouse. This is proven to work best. Try movement in the warehouse within those four walls, and the overhead will reduce. Therefore, growing overall individual productivity; few staff and few equipment needed.

5. Use Preventive Maintenance

If you prefer to reduce costs on your equipment, use preventive maintenance. This is utilised to lessen logistics costs. However, breakdown maintenance or emergencies don’t work. This is because it can be costly in terms of customer support, working hours, and fatal accidents. This leads to the container being unloaded, and the forklift dies.

6. Focus on Logistics Cost Reduction

The uncomplicated yet practical tip when it comes to logistics cost reduction of the supply chain is this: lessen costs by working together with suppliers.

Often, suppliers can pay some direct logistics costs. Consider creating a consortium of buyers (a customer and their suppliers) to buy the needed logistics supplies like transportation fuel. This leads to a reduced cost due to buying in large quantities.

Try inviting suppliers with a planned agenda at your warehouse. An example topic would be to examine your goods and address ideas for reducing logistics costs. Perhaps the supplier is a master in their field of expertise.

Without a doubt, suppliers can surely aid in pursuing to work with you in a win-win cost savings situation. While drastically reducing component costs and keeping a part’s function, just don’t forget never to jeopardise quality.

7. Keep Customers Happy

If you continue to keep logistics support costs low per order, the customers will surely be happy. Another best supply chain cost reduction method is to exceed the expectations of customers. Companies can effectively manage and keep up with the massive burden of lessening the logistics costs.

Since there is a high correlation between the overall cost reduction and client satisfaction, another aspect of assessing is customer service. They should also be informed of the changes in logistics costs to avoid miscommunication.

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8. Make Better Uses of Available Storage Space and Increase the Storage Density

Clearly identify and try to eliminate spaces. Always tends to increase the storage density in bins and racks by improving the use of vertical space. Lowers the damage to the shipping containers by eliminating movement during transportation.

Try to make better use of available storage space to increase the density of storage. Make efforts to encourage organised operations that are linked directly to labour, efficiency, use of assets and accuracy of inventories.

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