Supply chain costs are a challenge that most businesses deal with. With several different modes of transport often used to get all your products or components where to be, it rarely comes cheap.
Here are a few tips to help you navigate this hurdle and bring those expenses down somewhat.
Assessing your current transportation costs
Your first step is to understand how your transportation costs are broken down. This means developing a clear picture of how much the fuel, maintenance and labour involved all costs.
Your cost analysis should take everything into account. Don’t forget about vehicle maintenance costs, freight charges, insurance costs and administration fees.
To find all this information, refer to:
- Invoices and receipts
- Vehicle maintenance charges
- Freight charges
- Packaging costs
- A record of drivers’ wages
- Fuel consumption records
Strategies to reduce them
Shortening the routes used by your transportation companies is one great way to cut costs. Route optimisation. Logistics managers can use route planning software to improve things. This software is automated and a good one can really help speed things up.
When you’ve reached a transportation system that’s fast and efficient, you can confidently offer your customers same-day delivery. This can do wonders to boost brand loyalty.
You should also take stock of what vehicles are in your fleet. If any vehicles are becoming defunct or are no longer cost-effective to run, think of swapping them out. While it may seem like a large up-front cost in the short term, it may save your business some money in the long term.
Complete a ‘fleet rightsizing review’ to approach this methodically. This will involve analysing the daily, weekly or monthly mileage of each vehicle. You’ll also look at how many vehicles spend a lot of time stationary to see if anything can simply be cut from the fleet.
Negotiating with carriers
There is often the flexibility to negotiate carriers’ rates. The foundational premise of good negotiation is trust, so cultivating a long-term rapport with them is key.
See if you can reduce your deadhead miles (the empty journey after the goods have been dropped off) by arranging to send returns on the empty lorry or ship.
And once you’ve successfully negotiated better rates, lock them in by ensuring you get it in writing promptly.
For the transportation system to work smoothly, your employees need to be on board with it. You should train them in the efficient driving and handling of goods, telling them why it’s important. This is much more likely to succeed if you also introduce an incentive programme.
With the current shortage of HGV drivers in the UK, you should be doing everything possible to retain these vital members of staff.
Encourage feedback from them about how the process could be improved. They’re experiencing it first-hand, so you can’t underestimate the value of this. Making them feel heard will also make them feel valued, boosting morale.
Want to curtail your transportation costs without sacrificing the service you offer customers? It requires you to see the full picture. Addressing every element of the system is the way forward.