Most companies try to optimize those parts of logistics which are under the authority of partners (the process of shipping, activities of warehouses, transportation). And usually companies start cost saving in logistics from transportation, starting negotiations with transportation companies about lowering of prices. However, it is obvious that it is getting more difficult to find lower prices and the effect from it is minimal. In order to achieve a maximum result, cost improvement in logistics should be started from a business process optimization in logistics.
Four basic ways of cost saving in logistics
- Reconsidering of work of logistic service
Usually, logistics in a company (the structure of the department itself, logistic schemes and even the process of selection of logistic companies-partners) is constructed without any distinct plan. But even if the work is not based on a plan, specialists advise reconsidering basic objectives of a department at least once a quarter in order to define what business processes are to be optimized. Practice shows that the process of reconsidering allows defining weak points of the department due to which a company loses time and money.
- Stock management
Optimization of business processes in stock management is one more way of cost saving in logistics. Calculate the volume of goods needed to be in your warehouse, a minimal reserve stock, the volume of goods on the way and develop schedules of deliveries and order payments. This will reduce expenses of your company substantially. Thanks to business process optimization in stock management, you can save more money as you will get rid of unneeded stock. As well as lowering of expenses, you will be able to have more warehouse space which can be rented.
One more way to improve stock management is using of certain strategies in procurement. Using of such methods as prioritizing of purchased goods can also has a positive effect on profitability of a company.
- Planning of transportation
In order to reduce expenses on logistics, it is important to achieve safety and timeliness in transportation. In order to save money on transportation, it is important not only to ask transportation companies for discounts, but also to provide an appropriate planning of transportation. It is well-known that one of the most effective ways to reduce transportation costs is there and back loading. One more way is providing of the accuracy of schedules. It is also very important to use vehicle capacity: it should be taken into consideration when calculating of optimal order volume and the frequency of deliveries.
- Choosing of transportation companies
This aspect is also very significant in optimization of business processes in logistics. You always should be aware about new prices and services of the market of transportation companies. Don’t waste the resources of your company on ineffective, unsafe or too expensive services of transportation.