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Tips for Reducing Supply Chain Logistics Costs
Shipping costs are one of the biggest expenses in the operation of a goods supplier. Nowadays, businesses from around the world are working together to supply products to consumers across the globe. Product suppliers can be located thousands of miles away, separated by land and oceans from the businesses that sell their products. This contributes to high transportation and shipping costs for many companies and, in order to better survive in the challenging world of business, buyers are now searching for ways to reduce their overall transportation expenses. When it comes to global sourcing, finding a good business strategy for saving on transportation can make a huge difference to a company’s bottom line. Some changes can be made easily to your business model, yet the savings can be substantial. Take a closer look at how your business can start saving on shipping costs.
Plan ahead. When companies can look ahead, forecast their production needs in advance, and plan early for those needs, the total savings can be significant, especially when it comes to transportation costs. Prices during peak season tend to increase, so it is best to stock up on seasonal products early to get a good deal. Another benefit of ordering ahead is so that companies can take advantage of lower shipping rates by opting for longer, yet cheaper sea routes or shop around for other shipping companies with better rates.
Order in bulk. If you have the means to stock large orders, consider buying in bulk for products that you know will move once you get them into your store. By placing a large order all at once, you reduce your shipping costs since only one shipment is needed to get your stock in. You can also look into working with a freight consolidation service company to help reduce shipping costs by combining your order with other shipments.
Reduce packaging waste. In addition to eliminating unnecessary and perhaps harmful waste in the environment, rethinking the design and materials used in product packaging can greatly reduce the size and weight of your goods, which in turn can minimize overall shipping costs. Packaging shipments to make full use of the space within planes, ships, trains, and trucks can also help manage shipping costs.
Collaborate with your transportation carrier. Work with your chosen transportation carrier’s business specialist to see if they will match fees and services for regular shipment requirements for your company. By developing common shipping criteria, small business can sometimes save up to 40% or more in fees and overall shipping costs. It would also be wise to hedge oil costs with your transportation carrier when prices are low so that your business can lock in lower rates for future shipments.
Optimize your transportation route. The route used to transport your products from the manufacturing plant to your business can greatly affect your shipping costs. With the help of advanced algorithms and strategic planning, better transportation routes can be discovered, defined, and refined to minimize the duration and cost of shipments.
Utilizing a good shipping policy for your business is a smart and effective way to save on transportation fees. Although initial research and implementation of a smart transportation chain can be a complicated and time-consuming task, the long-term savings for your business are well worth the effort. By eliminating excess spending on your cargo, you can better guarantee a more successful business for yourself and your clients.