Are you searching for a freight cost reduction case study to know an efficient way to reduce transportation logistics costs? If freight is a crucial part of your company, your company will continue to face increasing charges throughout the whole of your transport logistics. In addition to the regular fuel and machinery market price rises, suppliers face many budgetary pressures in several directions.
For companies, reducing transportation logistics costs has always been the number one priority. There are several ways to optimize transportation costs, improve the supply chain procedures and save money for businesses.
Strategies for decreasing logistical expenses can range from streamlining inventory levels, revising smarter shipping networks, providing better processes, improving relationships between suppliers and third parties, etc.
A key ingredient in reducing logistics costs is to treat your customer well, listen to them and profit will follow. To help you reach so much more creative ideas, we present this 8 Practical Ways to Reduce Transportation logistics expenses:
1.Get Creative ideas – Don’t Rely On Single Modes
Becoming much more flexible and adaptable in your transport modes can really help to offset losses in ways you may not have taken into account. Freight shipping by sea is usually much cheaper than air. However, the time it would take could eventually cost you sales.
Try to look at transport costs for various modes but don't be too worried about making the switch if necessary. Intermodal transport would be another option available for you that could not have previously considered if you typically rely on single modes.
Rail transportation is considerably cheaper than trucking, but perhaps a unique combination of these two could be the key to staying on time and in a budget. Another way to help with the mode’s flexibility is to reduce your use of more expensive shipping options.
If your buyer only needs part of what you ship as early as possible, you will probably expedite the shipment for a whole load. However, you can bring down the costs by only expediting the freight that has to get there quickly and using cheaper modes for the remaining portion of the shipment.
2. Explore Shipping Consolidation Opportunities
The Less-than-truckload (LTL) shipment is an economical option for smaller weights. And if you can try to consolidate large shipments of different products or shipments for all buyers into one shipment, you would save cash using full load shipping (FTL).
3. Consider warehousing services
If you are shipping a lot of goods from point A to point B, especially over a long distance, you can store products closer to your customers and thus drastically reduce transport costs.
You must first and foremost understand the security considerations. Make sure that the operation of your warehouse is safe - Be securely proactive. Do everything to avoid expensive injuries. Try as much as possible to avoid government fines.
If you have several security problems, the government can close down your operation. Get a safety manager who would be accountable for safety and organize ongoing safety training.
4. Use Automatic container loading system to Reduce Labour Costs
Analyze the reduction of labor for any warehouse operation. Each project should concentrate on the costs of labour. Labor management software systems are available which can help manage warehouse work.
Creating incentive programs for employees in the warehouse also work best. Try mobility in the warehouse in your four walls. Overhead reduced. And this increases overall individual productivity; less staff and less equipment needed.
5. Use Preventive Maintenance
If you want to cut costs on just about any equipment, preventive maintenance is used to reduce logistics costs - Emergency or breakdown maintenance don’t work. It can be expensive in working hours, customer support, fatal accidents (safety): the container is being unloaded, and the forklift dies.
6. Focus On Logistics Cost Reduction
The simple best logistics cost reduction of supply chain tip is this: work together with suppliers to reduce costs. Sometimes suppliers can cover some direct logistics costs. Try to create a consortium of buyers (a buyer and their suppliers) to purchase the necessary logistics supplies (i.e., Transportation fuel) at a lower cost due to buying in larger quantities.
Start inviting suppliers with a structured agenda at your facility. One topic would be to analyze your goods and present logistics cost reduction ideas. The supplier is perhaps the expert in their field of expertise.
Suppliers can surely help by continuing to work with you in a win-win cost savings programme. Keep a part's function, but drastically reduce component costs, never jeopardize quality.
7. Keep Customers Happy
Keeping logistics support costs incredibly low per order involves customers to be happy (and this Fast-Track customer retention customers). One of the best supply chain cost reduction technique is exceeding customer expectations; companies can keep up and effectively manage the enormous burden of reducing logistics costs.
Because of this high correlation between client satisfaction and overall cost drastic reduction, customer service should also be assessed accordingly for changes in logistics costs.
8. Make Better Uses of Available Storage Space and Increase the Storage Density
Clearly identify and try to eliminate spaces. Always tends to increase the storage density in bins and racks by improving the use of vertical space. Lowers the damage to the shipping containers by eliminating movement during transportation.
Try to make better uses of available storage space to increase the density of storage. Make efforts to encourages organized operations that are linked directly to labor, efficiency, use of assets and accuracy of inventories.