Logistics cost forms an important part of the overall cost structure in any organization. The focus should be on renegotiating freight and shipping rates, reducing overall freight costs, and optimizing operations. There are six best practices most businesses can follow to reduce costs.
New Carriers: Checking the constant market rate is a good practice. Logistics managers are generally comfortable with existing carriers. This leads to cost creep. Checking market rates will bring to light other cheaper trades. New carriers may be more flexible in their quotes.
Freight costs: There are several options to optimize freight costs. The renegotiation of the minimum billing to a minimum for a zone should be explored. Product delivery coordination is another useful tool for optimizing freight costs. Today, both the USPS and Canada Post offer viable options for small packages. Arrangements with a number of smaller local carriers sometimes provide the best rate/best service combination. The Internet offers excellent tools to compare and optimize freight costs.
Improve shipping and receiving: Simplifying shipping and receiving practices will offer substantial savings. This can happen by reducing the window time to receive. The starting point should be the obligatory nature of delivery appointments. It is necessary to make a flowchart of all operations to determine waste processes and combine existing processes.
Technology: Internet tools allow for a substantial reduction in paperwork. Documents are scanned and emailed to customs, ports, etc. In the case of cross-border trade, documents must arrive at least twenty-four hours in advance to avoid delays at the border. The technology also allows the coordination of all shipments to optimize the load.
Returns management: Reverse logistics is an important element of transport costs. Most companies offer a liberal return policy. If the customer is not satisfied with the product, he can return it in 30, 60, 90 days depending on the seller. Sometimes the seller is also responsible for picking it up. To minimize the costs associated with reverse logistics processes, it is necessary to optimize them.
Freight cost audit: Use specialized agencies that provide post-payment audits of freight bills. These agencies are generally paid on a profit-sharing basis. These audits also provide valuable information on patterns and other cost reduction opportunities.