There is a lot of truth in the old saying that politicians talk about the size of an army, while generals talk about logistics. This is true in the business world as well. Logistics, and freight costs, are one of the major determinants in the success of a business. Here are six tips for reducing your freight costs.
TIP 1 - Partner with the right freight Company!
Partnering With A Freight Company: Transport providers like regular customers, just like any business, and are often willing to partner up and offer discounts to do so. Try selecting a few reliable transport partners and work on developing relationships for effective shipments of goods.
TIP 2 - Locating your warehouse
Locating Your Warehouses
Effectively: The location of you company can have a big impact on the freight
costs of your company. It is important to understand the different costs
associated with each type of transport such as road transport, ocean and air
freight, or other transport company services when you locate your factories so
that you can effectively receive and ship inventory. Understanding the location
of your vendors and customers is the key in this process.
TIP 3 - Just-In-Time with shipping and delivery
Managing Just-In-Time with Shipping and Product Costs: Just-in-time practices came into vogue when they were so successfully implemented by many Japanese auto makers in the 1980s. Just-in-time inventory management involves receiving smaller shipments of products that don't linger in your warehouse allowing you to avoid inventory obsolescence and warehouse waste. However, just-in-time inventory management often leads to higher freight costs. Instead of hopping on this trend, keep a total view of your costs in purview and understand the costs and benefits of less frequent and larger shipments. Remember all industries and companies are not the same and it is important to manage your company's freight costs.
TIP 4 - Joint Warehousing Of Your Goods
Warehouses: If you are a smaller company, then you may want to use a joint
warehouse and consider teaming up with some of the other tenants in this
warehouse space, if practicable. With this, you can select a transport partner
and obtain discounted transport rates when you are bundling your orders and
shipments with another company.
TIP 5 - Use Third Parties in Logistics
Don't Be Afraid to Use Third Parties: Many companies try to build a business that brings all aspects of manufacturing and shipping in-house with their own truck fleet. This can not only lead to more expensive shipping and freight costs, but can serve as a major distraction to management. Consider the third party freight companies out there when pricing out your freight costs and see what the most effective and cost effective processes.
TIP 6 - Book your shipments in time
Be Prepared and Save on Freight Costs: Companies that need to rush deliveries often have the most expensive freight costs when they need to rely on air transport versus more affordable ship or road transport options. Be prepared and plan effectively ahead of time to avoid the need for rush shipments.
Effectively managing your freight costs can be a great way to make your business more efficient and have these benefits filter down to the bottom line. Consider exploring your logistical processes with the aforementioned tips and see the benefits filter throughout your business.