How To Cut Logistics Costs

In the current climate of widespread financial uncertainty, many businesses all over the world are looking for ways to reduce costs. One of the most tempting ways for employers to save money is to implement wage restraint, but this comes with risks attached. For one thing, if many employers embark on a policy of wage restraint at the same time, there is a chance that this will merely exacerbate economic weakness by dampening down consumers’ purchasing power. It may also mean that other inefficiencies elsewhere in the organisation go unexamined. If you’re feeling the pinch and want to look at where you can save money, you could do worse than take a closer look at your supply chain. There are often hidden logistics inefficiencies which could cost your business money – which is something few can afford at the present time.

Steps to take to increase efficiency

There are a number of steps you can take to ensure that your supply chain is more efficient. Firstly, you should look at identifying and eliminating supply chain bottlenecks where possible. You should ensure that you review your business’ supply chain network periodically to ensure that everything is running as it should be. If you do identify any potential problems, you can then set about addressing them. You can eliminate any bottlenecks in your supply chain by ensuring that documentation and regulatory compliance is up to scratch, redesigning networks and reconsidering vessel planning.

You should also be aware of how easy it is for detention fines to mount up. The odd fine here and there shouldn’t prove too much of a problem, but if these issues keep cropping up then you really ought to address them. Look closely at carrier bills and identify where in the supply chain such problems are occurring. This should then enable you to make the required adjustments and thereby resolve the issue. Shifting to another mode of transport may also be a good idea. In some cases, you may be able to switch from air transport to sea transport, which is generally considerably cheaper. You should keep a close eye on your logistics operations in order to identify such opportunities.

Reducing Costs

Another way in which you can make your supply chain more efficient is to reduce inventory at manufacturing sites, warehouses and ports. Supply chain visibility is a key issue here, and if your logistics operation is too opaque you may find it more difficult to address these problems. Make sure you have reliable information about orders, and then you can start to trim your inventory however you see fit.

Performance management tools can prove crucial to the smooth operation of a supply chain, so make sure you have a system in place which is up to the job. A robust performance management process can significantly enhance the efficiency of your logistics network, allowing you to improve performance through the effective management of providers and critical cycle times. In addition, the use of postponement strategies can help you tackle out-of-stock issues as well as reducing forecasting errors, which are a major bugbear of many businesses all over the globe.

Guest post contributed by Simon Belfield, an avid blogger currently working and writing for a Eurotunnel Freight company.

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