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10 Ways to Optimize Your Logistics Management Strategy

VWB Blog 2 years ago 0

You might be one of the millions of companies globally that have seen massive disruption to your supply chain due to COVID-19. It’s slowed supply chains, cost trillions, and even put some companies out of business.

Weathering the storm and just taking a hit from this external event is tempting. But could your business do more to help improve your logistics?

The short answer is yes, you can. Here are ten ways to optimize your logistics management strategy to improve efficiency and cut costs.

1. Establish Some Metrics

Unless you know your baselines, improving your logistics will be tough. So you must agree on KPIs (key performance indicators) and easy and practical ways to measure each.

Popular KPIs in logistics include warehouse costs, the accuracy of your orders, lead time, and average rotation time of stock. You may also want to have some productivity measurements for your logistics team.

Once you have these metrics, run a monthly logistics review to see where you currently sit against your targets.

2. Invest in Automation Technology

Measure your logistics processes and identify critical areas where you still rely on manual input. You will probably discover that you can optimize many of these touch points by investing in automation technology instead.

You could offset any upfront investment with cost savings such as time efficiency and error reduction. For example, this fleet management software can help you achieve an automated solution.

Technology investments will also free your staff to focus on the more complex parts of your logistics management. You could even consider getting an all-encompassing supply chain solution to automate vast chunks of your current logistical setup.

3. Build Partnerships

You’ll have plenty of third-party companies with whom you interact as part of your logistics planning.

Suppose you have a solid and effective working relationship with these businesses. In that case, it might be an excellent opportunity to sit down and discuss a partnership.

You can uncover many win-win scenarios when working directly with another company.

That could be as simple as sharing data via a shared technology database. Alternatively, perhaps you can look at something more ambitious such as shared warehouse or transportation solutions to lower business costs.

4. Apply Best Practices to Your Returns Department

Returning unwanted or faulty products is common as companies compete for sales. That means customers have high expectations for how you handle these returns.

Ideally, you should have a dedicated returns department for your business to help you improve your customer service and streamline logistics. Review current best practices for your returns process and make small steps to improve them.

Start by addressing speed. Fast returns and refunds go a long way to making a customer happy.

Pre-paid return labels for any product you ship are also something that will impress your customer and help you ensure all your returns go back to the correct stock location.

5. Use Real-Time Tracking

You can improve your processes and customer service when managing customer deliveries by using real-time tracking.

That means using a shipping partner with the technology to track the parcel and provide this to your customers in an online facility.

It’s standard practice nowadays, so it’s also cost-effective. It will reduce delivery inquiries and instances of missing or late parcel deliveries.

6. Review Mistakes

All businesses experience problems at some point in their logistics management. But the most critical factor for improving your business is whether you face up to those issues and learn from them.

Take the time after each significant mistake to sit down as a team and figure out what went wrong and what changes you can implement to stop it from happening again.

7. Outsource Routine Tasks

Recruiting and training experienced in-house personnel for your logistics department takes time. You should use that investment wisely and assign internal teams to work on areas of your logistics where they can add the most value, such as management.

But you’ll always have some aspects of your logistics that are low-skilled and simple. In these circumstances, outsourcing this work to an external staffing agency, like your transport management, makes more sense.

It will lower your costs and give you greater flexibility to increase or decrease these tasks to handle seasonal fluctuations, such as Black Friday orders.

8. Review Your Inventory Management

Most companies have long-established methods for managing their inventory. But even if you think it’s working well, it’s worthwhile doing an end-to-end review. If you have the budget, hire an external consultant to review it.

External logistics experts will likely spot things you may overlook as the processes will feel overfamiliar to you.

Even if you don’t have the budget, it’s worth setting aside some time to test your processes to spot gaps and inefficiencies and see how well you adhere to current best practices. Ideally, it would be best if you did this annually.

9. Diversify Your Suppliers

Don’t expose your company to unnecessary risks by relying too heavily on a single supplier for your logistics. Always add flexibility to your supply chain to adapt quickly if you have a problem with a single supplier.

Assign someone internally to manage these supplier relationships so they can spot issues early on before they become an issue for your business.

10. Compare Shipping Fees

Shipping costs are one expense that you’ll need to manage proactively. Keep an ongoing report on the costs for all your shipping suppliers (or internal costs if you do it in-house).

Regularly look outside your current suppliers to see what else is available on the market and whether you could save money by shipping. And negotiate fee reductions with your suppliers as you grow as a business.

Optimizing Your Logistics Management

There is always something you can do to optimize your logistics management processes and tools. And the potential for cost savings and customer service improvements is endless.

For more information on how to streamline your company, head to our business section to read our latest blog posts.

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