[SK] 10 ways to optimise logistics costs

To stay competitive, you work hard every day to provide quality logistics services to your customers. This is essential to ensure their loyalty and thus your profitability in the medium term. The second logistics challenge that drives many industry professionals is finding ways to optimize logistics costs in order to increase profitability in the short term. So let’s talk about logistics costs today! Here are ten ways you can reorganize your budget and optimize logistics costs throughout your supply chain.

Organise your warehouse better

The first way to optimize your logistics costs is to organize your warehouse system. The goal is to gain warehouse space, but also to streamline picking and reduce order preparation time so you can optimize your day-to-day operations.

So how to proceed?

First of all, you need to put in place a storage method that is suitable for your products and your business. You can opt for:

• The ABC (Activity Based Coasting) method, which involves storing goods according to how often they are ordered.
• The FIFO (First In – First Out) method, which involves placing products that have recently been stocked as close as possible to the order picking location. It is particularly suitable for the storage of perishable products.
• LIFO (Last In – First Out), the reverse of the FIFO method.

You should also take care to install vertical storage systems to save even more floor space. This includes choosing shelving that is adapted to the size of your stock, and installing storage systems that optimise picking. These include bins for small bulk products.

Anticipate your operations and optimise your inventory

This is about anticipating your company’s sales, especially in relation to order peaks (end-of-year season and holidays, sales, etc.). With this logistics strategy, you have a timely view of your inventory so you can avoid overstocking and reduce unsold rates. This way, you can manage your inventory more just-in-time or even in real-time, allowing you to reduce your storage space according to your actual needs throughout the year.

So how to proceed?

Install sales forecasting software in your warehouse. It features a layer of predictive artificial intelligence and allows you to tailor your supply chain operations to the needs of the market.

Automate order management

Manage inventory by order, create stock lists, order forms, invoices, inventories… These are all tasks that require your logistics operators to spend time on purely administrative tasks where they add little value and where they may make mistakes. By automating order management, you allow them to focus on placing orders in the warehouse or preparing shipments. The result: your order error rate will drop and they can have a direct impact on your customer satisfaction.

So how to proceed?

Choose a Warehouse Management System (WMS) tailored to your business. This is software that automates the entire management of your logistics, from order processing to shipping. Make sure you choose software that can be updated over the years to keep up with the growth of your business.

Speed up order picking

Increasing the speed of order picking will allow you to prepare more orders per day, thereby increasing sales. Plus, by speeding up logistics shipments, you’ll improve the customer experience!

So how to proceed?

First of all, choose time-saving packaging. This can be packaging that is easy to fold or packaging that directly incorporates a fixing system to reduce the time spent manually inserting fillers. You should also consider mechanisation or automation of logistics activities. Paper or air filling machines, strapping machines or stretch wrapping machines for palletizing can significantly speed up warehouse throughput and make order picking much more efficient.

Buy packaging in bulk

If you want to rationalise your packaging costs, there’s nothing better than ordering packaging in bulk. Most specialists will allow you to take advantage of better prices when ordering larger volumes of packaging.

So how to proceed?

Find out what prices your logistics packaging provider offers if you are ordering in bulk. Also, plan in advance the volume of packaging you will need at any given time and allocate space in your warehouse to store it.

Outsource logistics services if necessary

Outsourcing logistics involves entrusting all or part of your supply chain to an external logistics service provider with optimal expertise in order management and logistics dispatch. Outsourcing can allow you to focus on your core business, optimising your marketing or sales strategy and maximising your return on investment.

So how to proceed?

Choose the right logistics outsourcing provider based on their specialisation in relation to your products and your business sector. Then analyse their prices: if they can reduce your current logistics costs, they may be worth using.

Optimise the loading of transport vehicles

It’s all about getting rid of empty space in your shipments – because it can cost you dearly when the carrier charges you by volume weight! This is especially true if you’re shipping internationally or by express.

So how should you proceed?

First of all, choose packaging that is truly tailored to the protection needs of your products. This will help you avoid wastage, for example during filling. If your goods allow it, you can also opt for less bulky packaging, such as flexible packaging (e.g. envelopes) or extra flat boxes. If you have your own fleet, make sure it’s sized for the volume of shipments you handle on a daily basis.

Check delivery times and optimise logistics costs

Express delivery is the most expensive delivery method offered by shipping providers, and it’s also the one that delivers your goods to customers the fastest. A good reason to find out if your customers really need it, and possibly optimize your logistics costs!

So how to proceed?

Give your customers the option to deliver goods less quickly and offer them a better rate for these deliveries spread out over time.

Combine your shipments with other companies

We move faster ourselves. Together we get further – and more importantly, at a lower price! That’s the main motive behind bundled delivery, which involves combining shipments from multiple companies for dispatch.

So how to proceed?

Some carriers offer joint delivery services for different customers. If you can’t find what you’re looking for, you can also offer a company near your warehouse the option to combine your shipments.

Tender your shipments on a regular basis

One last interesting way to optimize your logistics costs is to try to get the best deals from shipping service providers without compromising on the quality of the service you provide by regularly issuing tenders.

So how to proceed?

Create a comprehensive specification of your logistics needs and send it to several service providers. They will easily provide you with information on the discounts offered depending on the volume of shipments sent each month.

Now you have all the information you need to optimize costs throughout your supply chain – from procurement strategy to shipping processes!