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How Can Your Small Business Save Money on Logistics?

How Can Your Small Business Save Money on Logistics?

by spainops
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Your company’s supply chain covers everything from ordering and storing raw materials to managing your finished inventory to fulfilling orders and ensuring they get to the buying customer safe and sound. With so many different steps in the supply chain process, it can become overwhelming to manage.

If you’re not properly overseeing your supply chain, costs can begin to inflate. Without clear systems, processes and budgets, you may easily find yourself spending way too much money on your supply chain and logistics.

Cutting your supply chain costs may actually be easier than you think. If you feel like you’re overspending in your logistics department or you just want to save your business as much money as possible, here are a few smart cost-cutting ideas you should try.

How to Save Money on Logistics

Create a Detailed Timeline

Last-minute decisions can lead to mistakes, missed opportunities and high costs. If you don’t have a clear plan of when items should be produced, shipped and delivered to your customers, you’re likely to take on some unnecessary costs before the shipment is completed.

Create a detailed timeline that follows each and every product from start to finish. Know how long your products will take to manufacture, when an item will need to be shipped to be delivered on time and what you can do to reduce those costs. If you take the time to consider the small changes you can make in your timeline, you can free up ample room in your budget.

Use a Multitasking Supplier

Your suppliers are a major part of your business’s success. But if you’re buying different items from suppliers all over town, you can run into additional costs. When there are too many areas you need to collect supplies from, your supply chain becomes longer, you have longer lead times and you will end up paying more.

Work with suppliers who can provide you with multiple things you need. Companies with multiple capabilities can help you reduce time and can even save your company money. Multitasking suppliers can also reduce the chance of mistakes and eliminate additional supply transportation costs.

Have a Backup Plan

While you will want suppliers who can provide you with the majority of what you need to create your product, you don’t want to have all your supplies coming from one location. If your supplier does not have any competition, they may want to jack up their prices, knowing it could be more of a hassle for you to find a new supplier.

Having multiple suppliers can also ensure your business runs smoothly if there is ever an issue between you and one party. If you have multiple suppliers, your production won’t stop if one goes out of business, you can’t come to an agreement or they raise their prices outside of your budget.

Run a Lean Operation

A company is lean when they do not have frivolous or unnecessary additions to their processes. For supply chain, a lean operation includes operating at full capacity, keeping little raw material sitting in inventory and properly forecasting future purchases and demand. While a lean operation is not always easy to run, it can save your company a decent amount of change.

To start, look at where your company could be more efficient. Are you frequently sending out half-empty shipments? Are your facilities or storage units underutilized? Cut back on the things you don’t need and rearrange items or processes until you’re making the most of your space and assets.

Only Use One Platform

Instead of using multiple platforms to perform different tasks, keep all your information, needs and product details in one place. Be sure this platform is accessible to anyone who may need the information.

Operating on just one platform can reduce mistakes, missing information or duplicate activities. When you have fewer platforms to flip between, there is a smaller chance of an order going missing, getting sent to the wrong location or being forgotten. If you have fewer mistakes, you’ll save time, money and headaches for your employees.

Consistently Review Your Demand Needs

No matter how long you’ve been in business, your demand will probably change from time to time. Certain seasons or years may be busier for you while other times may bring you fewer orders. If you’re operating on the same supply chain plan all year round or from year to year, you’re probably wasting a good chunk of money.

You should be doing research on your demand consistently throughout the year. Make adjustments to your supply chain periodically throughout the year to reflect your research. Track your projections and your actual orders until you have a better idea of what your demand looks like.

Consider Outsourcing

While outsourcing your supply chain management would mean another expense for your business, it may actually help you become more efficient and make more money. For smaller businesses that may not have the funds to keep a full supply chain team in-house, outsourcing logistics can take the stress off your shoulders and give the work to a professional.

Outsourcing your supply chain management can also reduce the number of mistakes your company experiences during the fulfillment or shipping process, saving you precious time and money. If you feel like supply chain is something you just don’t have time to master, consider outsourcing at least a part of it.

If you’re not paying close attention to your supply chain, it can easily get out of control. The more mistakes you make, the more money you need to pay to keep your customers happy and ensure they’re getting the products they’ve purchased.

Getting smart about your supply chain is one of the best ways to reduce costs and improve your efficiency. With these tips, there’s no reason you should still be struggling to streamline your supply chain process.

Logistics Photo via Shutterstock

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