Now more than ever, the opportunity for logistics efficiencies is present for retailers, in particular for those in e-commerce. With manufacturing steadily making its way back to North America, companies can apply a combination of technology and improved operation procedures to cut costs, improve delivery times to customers, and increase margins on overall profitability.
Exploring Logistics Efficiencies
You should most definitely have a clear number when referring to your logistics cost. Logistics costs need to be considered as a percentage of sales. This means they need to be managed equally as stringent as any other production cost. Companies who ignore having an efficiency plan in place can be facing up to 14% of logistics-related costs as a percentage of sales as opposed to half of that if a proper plan is put in place.
So exactly where are these efficiencies?
The first area worth mentioning is technology. Organizations need to first be aware of the technologies available then know how to make use of these technologies to increase efficiencies. It’s now possible to track precisely where a package is from production to delivery, as well as giving customers the tools to track their packages. Having automation features in place is another benefit of technology that needs to be applied when exploring logistics efficiencies.
Moreover, having designated freight accounting can help this cause. This will allow for discovering areas where it’s possible to reduce transportation costs and increase speed of cash flow. Any differences between quotes and the actual bill will also be noticed, along with any incorrect charges. Consolidating the invoice to once a week regardless of the amount of trips will make all of this much easier to accomplish.
Benefits of Logistics Efficiencies
Reduced Delivery Time
There shouldn’t be a question as to why companies should be looking for improved efficiencies, but there are clear benefits when it comes to logistics efficiencies that we can discuss. Reduced delivery time is one benefit, which speaks directly to the relationship businesses create with their customers. It also becomes a marketing advantage to be able to offer customers their products faster than competitors.
Quality Control
Another important benefit to incorporating an efficiency system is quality control. Being on top of the logistics means you catch any manufacturing or productions issues before they have the chance of getting to the consumer. Pushing out damaged or incorrect products is a severe blow to the reputation of a company and a strong logistics system prevents that.
At the end of the day, when and how a customer receives their order is crucial to the success of any business. The logistics strategy you have in place becomes vital to fulfilling that expectation.
Total Cost Reduction
Optimizing your business logistics can significantly reduce on your overall revenue. Businesses that adopt cost-saving logistical measures to ensure top efficiency can save anywhere from five percent to seven percent. For a small business with annual revenue of $1,000,000, that’s a savings of $50,000 to $70,000.
Competitive Advantage
Improving your logistics with greater efficiency allows you to provide better services to your customers. Utilizing technologies and optimizing your warehouse and shipping systems mean customers receive the right orders more quickly.
Build Good Customer Relations
It’s a reality today that customers have their pick when it comes to choosing from a variety of the same product. If customers initially like your product and you disappoint them with your shipping, then they’ll have no problem turning to your competition. Establishing and maintaining good shipping habits builds trust with your customers and keeps them loyal.
For that reason, companies need to seriously consider outsourcing their logistics to a third-party logistics (3PL). 3PLs such as APS Fulfillment, Inc. already have these structures in place and can adapt its processes to your company’s specifications. Logistics efficiencies are natural for APS Fulfillment. Take a look at our web site and learn more about how we can help improve your company’s bottom line through advanced logistics services.
