Supply chain logistics costs add up and to many businesses represent a major component of overall company spend. Streamlining your supply chain and reducing these costs will have a major impact on your company’s bottom line.
Here are a few key areas we’ve seen that can help reduce your overall freight and supply chain logistics costs.
1. Supply Chain Performance Bench marking
Accurate Freight spend reporting is the most important component to analyzing your supply chain costs and identifying potential opportunities for optimization. Use a inventory or warehouse management system to collect highly detailed data across each step of your supply chain.
Pay special attention to changes in seasonal changes in both transportation pricing and performance. Throughout this process some modes of transportation will be less costly and more reliable on certain lanes while others will be disrupted more by seasonal or weather changes.
2. Team members on board
Your supply chain logistics team needs to be well versed on your supply chain strategy in order to properly execute on the plan. Make sure processes are well documented and understood by anyone involved within your company’s logistics team. Encourage team members to assess your supply chain procedures regularly and suggest data based improvements for constant improvement to your logistics system. Overtime processes will be refined and optimized to reduce workload and cost.
3. Over Reliance on on Carrier or mode
Many shippers overly rely on one mode of transportation or carrier. Building relationships is important as is familiarity with a mode, but many times this can lead to increased costs. Particularly with shippers that move mostly LTL freight, many times they could reduce supply chain costs by utilizing FTL services on the larger shipments, or consolidating several LTL loads into a FTL load if the destinations are close by. Many shippers also have little experience with intermodal, which is ten to twenty percent more cost effective on lanes longer than 500-800 miles. While it is true that intermodal will result in a longer shipment time, the cost savings can add up significantly. Shipping intermodal, particularly with Zmodal as a digital provider is nearly as easy as booking a flight online!
Reliance on carrier can also create an issue if that particular carrier has an internal challenge or change which results in higher charges or delay even on specific lanes.
Overall seek to build relationships and experience with a number of providers and modes of transportation, this supply chain diversity will create a more stable and more cost effective system.
4. Packaging
Consider how you package your products. We’ve all seen products in stores or even B2B products that have an abundance of extra packaging that really is not necessary. Reviewing your product packaging can lead to decreases in volume and weight that will reduce freight costs, as well as reduce material costs for packaging. Wasted packaging material has also become a focus for environmentally minded companies, whether that be simply reducing the amount of packaging needed or switching to some form of recycled material.
However, make sure also that your products are packaged in a way that safely gets them to their destination. A reduction in the amount of damaged goods will also lead to reduction in wasted expense.
5. Predictive demand and reduced inventory
Data analysis of inventory levels and demand can result in drastic cost savings as well as an increase in return on capital. Use your warehouse or inventory software to determine minimum inventory levels for specific periods of time. With this, you should be able to predict spikes in demand and adjust your just in time inventory planning in accordance.
Consider also exploring supplier relationships to reduce the purchase minimums for inputs or products. This can reduce inventory holding costs in your warehouse as well reduce the amount of freight that is moved. Many times cost reductions can be achieved by routing inbound freight yourself. A well versed logistics team can easily start handling inbound freight with existing logistics partners, this not only gives you control over the costs but also helps your warehouse and dock team operate more efficiently.
There are many more ways to reduce freight spend, but those above are some of the most common as well as some of the easiest to implement. If you aren’t already, give them a shot, without a doubt they will reduce your supply chain costs.
If you would like help or guidance with creating a more efficient supply chain or logistics plan, let us know, we are happy to help analyze your supply chain for potential savings as well as helping you trial new shipment modes such as intermodal.
About Zmodal
Zmodal is a digitally enabled third-party multimodal logistics provider delivering intermodal, trucking and supply chain services via our own digital intermodal platform powered by our proprietary technology, all focused on giving you the service to make your company grow!
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