How to save money on E-Commerce logistics?
There are so many methods that can help to improve supply chain processes and in turn save a business money. Way of reducing logistic costs can range from optimizing inventory levels, to re-charting better shipping networks, to create better processes, to improving supplier/third party relationships and so on. Here we have mentioned tips on how to save money on logistics;
It is better to utilize available floor-space to increase storage density. If we increase storage density in bins & racks by improving vertical space utilization or bin re-profile as a means to achieve it. It decreases freight costs through better truck utilization in both full. Sometime warehouse floors and area have big unused space where we can consider to save cost by utilizing it.
For companies to reduce logistics costs, automation is one of the key part. Automation is act of implementing the control of equipment with advanced technology. One of the objective of warehouse management is making it more and more efficient, that’s why warehouse should be technology based. Only having large number of employees on warehouse doesn’t mean the work is being convenient. Automation will save lot of costs and time. Regulating, automating and optimizing manual processes can reduce staff requirements, centralize production operations to lower-cost areas and create a more proactive approach to ensuring customer satisfaction, all while providing scale and controlling costs.
To cut costs by going greener, you can look at the overall area of fuel costs and examine reducing fuel consumption–by streamlining routes, making vehicles more aerodynamic, changing bad driver habits (like long idles), and perhaps fuel remixes that include vegetable oil.” Going green not only help you to cut your costs but also it helps your company to become green company.
One way to reduce warehouse inventory/carry costs is to improve inventory accuracy and visibility throughout the supply chain. Higher inventory accuracy can lead to improved performance in other logistics processes. For example; APQC’s Open Standards Benchmarking(r) data indicates that an increase in inventory accuracy from 98 percent to 99 percent is associated with a decrease in the pick-to-ship cycle time for customer orders, a decrease in the percentage of orders expedited, and an increase in the amount of sales orders delivered on time. When the organization spends less time picking materials ordered by customers it needs to expedite fewer orders. Faster processing and delivery of products leads to more satisfied customers and lower inventory carrying cost.
Collaboration and partnership
Collaborate and partner with Suppliers to help reduce costs. Suppliers can sometimes absorb direct logistics costs. Create a consortium of buyers (a client and several of their suppliers) to buy needed logistics supplies (i.e. transportation fuel) at a reduced cost that comes with buying in greater quantities. Invite suppliers to your facility with a structured agenda. One topic is to Value Analyze your products and for all involved to submit logistics cost reduction ideas.
Some companies believe that the best negotiated prices can be achieved when they use a single source for all their transportation. To ensure you have an optimized supply chain, you want to make sure you’re delivering what your customers want, when they want it. And you’re achieving that goal by spending as little money as possible. Reducing your transportation costs can be a significant way to spend less money, without impacting customer service.
These are some tips to reduce your logistics costs. Beside that we can also focus on some other parts like;
- Reduces damage to case picked pallets by eliminating movement in transit.
- Encourages organized operations, which is directly linked to labor, efficiency, asset utilization, and inventory accuracy.
- Control unnecessary movement of materials from one location to another.
- Too much inventory causing inventory costs due to lack of demand & supply data. So, focus on demand and supply process.