In a company, the supply chain makes it possible to manage the flow of goods which transits from the production phase to delivery to the end customer, passing through storage and transport. An effective value chain aims to meet deadlines and ensure a successful customer experience while successfully reducing costs at different stages.
This difficult balance between cost savings and customer satisfaction can be achieved by implementing several procedures to optimize all the tasks that make up the value chain. The costs relating to the transport, supply, and storage of goods can heavily impact the company’s profitability when well-specified tools do not control them.
We Reduce Logistics Costs, A Major Challenge And An Essential Performance Lever
Logistics is an essential lever in business management, and the various processes that compose it must be optimized through good task planning to reduce costs and improve profitability. Logistics costs are not the same for all companies. They vary according to the type of goods marketed, the means of transport used, the size of the warehouses, and the purchasing strategy adopted.
These costs mainly include transport, storage, supply, and labor. The performance/profitability balance is a priority in logistics management. It ensures timely delivery while maintaining control of expenses during the various operations. The main logistics costs related to the various stages of the value chain mainly concern:
- transportation costs
- Goods storage costs
- Supply costs.
It is possible to reduce these costs by implementing an effective strategy, increasing profits, and focusing on the evolution of the company’s activities. Achieving savings on the value chain costs is a real challenge, often difficult to meet, which requires having sufficient leeway to control expenses at the different stages.
Optimize Packaging Costs
Packaging is an important item of expenditure in the supply chain. This aspect must be carefully studied, choosing the most suitable packaging for the nature of the products. Well-designed packaging makes it possible both to avoid unnecessary cushioning and reduce the weight or volume of the package to be shipped, which has a direct impact on the cost of transport. Some pre-designed packaging is intended to directly protect the products without adding materials, such as bubble envelopes, postal boxes with integrated foam cushioning, or cardboard envelopes in several formats.
In this context, reducing costs sometimes involves the replacement of certain unsuitable packaging after having detected the existing anomalies using an audit of the company’s current packaging process. Thus, the most used packaging is examined, drawing up a list of the articles marketed to detect packages that are too large or require a large quantity of cushioning material. By improving these points, the cost related to packaging can be controlled, which influences the total expenses of the value chain.
Optimize Transport Costs
The transport of goods is an expensive item for the company, which involves choosing the most suitable means of transport, the most optimized route, and taking into consideration the risk of breaking. Delivery routes must be determined intelligently, considering different criteria, such as the intensity of the flow of shipments in the same region. Studying the current routes makes it possible to detect the errors and bad practices that induce additional expenses. In addition, the choice of the appropriate means of transport is an essential step in optimizing logistics costs.
This choice must consider the distance traveled for delivery, the volume of items to be shipped, and the price of each means of transport. Thus, the train is preferable to the plane for nearby destinations, just as motorbikes and bicycles are alternative means of transport that are fast, ecological, and practical for deliveries in town. Most carriers define the cost of transport according to the volumetric weight of the packages, which represents the degree of congestion of the package, particularly in an airplane.
This weight can be reduced with a good packaging policy, which avoids voids inside packages. The constitution of parcel pallets can be a safe and economical solution if the company uses the same carrier for several parcels. This method allows boxes to be placed, considering their fragility, size and volume and adding the necessary protections.
Reduce Warehousing Costs
The storage of goods for shipment is a necessary operation, which can be very costly if it does not respect certain rules relating to the storage space and the shape of the packaging used. It is not by enlarging the storage space that it is optimized, but by exploiting it intelligently, through a better arrangement of the goods, effective management of the stocks, and the forecast of the demand’s insight. Reduce overstocking. The machines and various equipment used for handling and storage must also be evaluated in terms of performance to detect bottlenecks or heavy workloads. This mainly concerns forklifts, conveyor belts, or pallets.
In this context, the robotization of the handling of goods in the warehouse is an effective solution that maximizes space, avoids operator injuries, and improves performance. Reducing logistics costs related to storage also essentially involves using an efficient information system. The role of such software is to constantly monitor the flow of goods arriving in the value chain to avoid overstocking or lack of products. Many IT solutions can automatically generate inventories and reports that provide information on inventory usage to make decisions based on this data.