If you’re in the business of selling products, then you’re in the business of manufacturing, storing, and shipping products as well. That means as a business owner you need to have a logistics strategy in place that makes this process efficient and cost effective. Your logistics should be an asset, a tool your business uses to maximize profits and solidify your relationship with customers. Used incorrectly, however, it can be equally as detrimental to the operations of your organization.
That said, what does a winning logistics strategy look like? What features are necessary if you are hoping for your business to optimize its logistics opportunities? In this article, we’ll discuss a few characteristics of a highly effective strategy.
Negotiate Freight Prices with Predictive Volumes
Because logistics strategies for new businesses have no history, it can be tough to know the amount of volume to plan for. This is when collaborative research needs to be conducted to produce predictive volumes. When this is done correctly, you put yourself in a position to negotiate fair freight prices. Otherwise you may end up overpaying until a history of work is developed.
Get Into Demand-Driven Logistics
The goal here is to better match the demand for your product with the supply. This goes further than reducing how much is spent on transportation. If a business can really sync these together, then less inventory is stored and customer service becomes a stronger focus.
It’s a Team Effort
Logistics needs to be understood and categorized as a function that is part of the company’s operations; not separate from it. That means they should be at the table as part of sales and operations planning, which should involve a regular meeting of all of those positions playing a role in the ongoing activities of the business. This includes marketing, sales, manufacturing, warehouse, finance, and whoever else falls under this specification.
Order Picking Accuracy
The earlier an organization can catch errors in the shipment process, the less impact those errors will have. If you are dealing with delays or errors in the picking process, your customers may likely be receiving the wrong item. This can have a seriously negative impact on your logistics strategy, your business productivity, and customer opinion. Order picking errors show customers that you are inefficient in the warehouse, which does not help your reputation. This is why this process should be a top priority. An organization must have a strategy to verify that the picked item is the same as the item ordered by the customer before it leaves the warehouse. Otherwise, the organization may be unable to catch errors and measure and guarantee picking accuracy. Thankfully, this can be monitored through automation software, which a third-party logistics (3PL) provider can offer you.
It is vital to know where goods are at any time in the supply chain. A good 3PL company can provide businesses with the tools they need to manage their own supply chains and inventories more effectively. It is also important for businesses to be able to warn customers of any deliveries that may be arriving late. Giving customers a “heads up” beforehand shows that you are a proactive supplier and that you’re able to manage the situation.
Any smart business understands that it is worthwhile to spend a little extra money and give a little extra responsibility to their 3PL provider to make sure that they are getting higher-quality operations. By communicating your expectations, you can make sure your provider is aware of the standard by which they should be operating. They should be willing to invest in additional resources to gain better-quality services for you. If you notice their performance is slipping, it is a good idea to meet with them and address your concerns sooner rather than later.
Relationship with Your Provider
Although there are benefits to working with any 3PL provider, you can benefit more by working with a team that you connect with. They need to be as committed to working for you and your company as they are to the growth of their own business. At the first meeting, you will probably get a good idea of how well they communicate and if they are open and honest with their partners. You can be confident that the provider you’re working with is right for you if they are seeking to do their best for you. Even if you have been working with a 3PL for a while, it is still a good idea to meet with them and conduct a review on a regular basis. They may be offering you terrific service, but you should still be measuring them against similar competitors.
Logistics Should Be an Extension of Corporate Strategy
This concept is fairly simple but not always followed to the extent it should be. We touched on this a little bit in the last point. Know that if your company is based on being friendly to the environment, then your logistics should be eco-friendly as well. If your business is based on being cost effective to your consumer, then your logistics should follow suit. Keeping the brand consistent all the way through helps reinforce your promise and your purpose to your customers.
APS Fulfillment, Inc. understands the importance of a sound logistics strategy. We incorporate our use of the latest technology with a team of experienced and knowledgeable staff who know what it takes to help businesses get ahead.
Pontius, N., “Logistics Strategies for Businesses: 19 Experts Share Tips on How To Develop a Winning Logistics Strategy,” August 20, 2015; http://www.camcode.com/asset-tags/how-to-create-a-winning-logistics-strategy/.