Cost reduction in logistics and distribution is challenging and we’ve seen companies trying to achieve quick cost reductions. Cost reduction starts with fully understanding all costs and separating them into variable and fixed costs. Following are some strategies to reduce cost reduction:
◼ Safety First
All shippers and logistics provider must understand all the safety considerations. Ensure that your warehouse operation safety. Be proactive with safety. Stay away from the fines and injuries that could cost the company a lot of money. If you have too many safety issues, your company can be shut. Appointing someone like a Safety Manager who can be accountable and responsible for the safety and ongoing safety training can be a wise decision.
◼ Focus on Labor Costs
The second thing to consider is labour reduction for any warehousing operation. The Labor Management Software systems can help in managing work in the warehouse. Incentive programs for warehousing employees do work. And also the projects that automate repetitive, structured tasks, like light or voice-directed picking, robotics, etc. Try warehouse mobility to reduce overhead costs. Not only it will increase individual productivity but also reduce the cost of staff members and types of equipment.
◼ Focus on Preventative Maintenance
Preventative Maintenance is a way to achieve logistics cost reduction to save money on any equipment. Reactive fixes/maintenance do not work. In the middle of an operation, you can have an equipment breakdown. This can be costly in man hours, customer services, accidents.
◼ Focus on Technology
A WBS and a TMS can be your key to cost reduction in Logistics. In the rapidly growing world of technology, you cannot ignore the benefits it offers and wonders it can do for the cost reduction.
An excellent Warehouse Management System (WMS) can help reduce costs by automating cycle counting and maintaining location control. The layout of your warehouse can save you money. Product slotting or having top demand SKUs near shipping, will reduce the cost of picking and put away. When demand changes, you have to re-slot.
A Transportation Management System (TMS), on the other hand, optimises freight to utilise the most effective lanes and routes.
For companies to reduce logistics costs consider automation. Use a Warehouse Execution System (WES) combining WMS and a Warehouse Control System (WCS). Regulating, automating, and optimising manual processes can reduce staff requirements, centralise production operations to lower-cost areas and create a more proactive approach to ensuring customer satisfaction. With an automated, cost-effective transportation and logistics system, a company can implement major strategic changes to provide visibility, reduce costs and increase customer service levels.
◼ Focus on the Customer
Keeping the per order cost of logistics support low requires keeping customers happy. By giving the customers more than their expectations, companies can keep business up and spreads out the burden of logistics cost reduction over a greater number of orders/customers. Because of this direct correlation between customer satisfaction and overall cost reduction, customer service should be factored into any measurement of changes in logistics costs accordingly.