Logistic Bottlenecks Can Kill Your Business

How small businesses must adapt to the changing logistics world

Logistical considerations have always played a strategic role in business, today more than ever.  Logistics can spell the difference between success and failure in business. 

In recent years, changes in the business environment have forced small businesses (and larger companies, too) to pay particularly close attention to how this function relates to others.

Here are a few tips on logistics optimization for small businesses; how you can minimize bottlenecks.

Understand the objective

The principal purpose of logistics is to get merchandise from one location to another.  First from the vendor to you.  Second from you to your customers.  You want to do so in the most expedient, cost effective manner possible with transparency of doing so along the way.  Not having your offerings can mean missed revenue.  But, having too much is costly.

Strategies

Many companies manage logistics by developing competitive strategies considering postponement and speculation, standardization, consolidation, and differentiation. They may conduct formal or informal logistics audits, redesigned systems to provide more effective support, and take steps to ensure continued appraisal of opportunities over the long run.

Government regulation, the health of the nation’s transportation system, energy restrictions, custom and trade restrictions, and technological developments all represent important considerations in the formulation of a logistics business strategy.

Strong customer focus

Logistics is not only about delivery. It is also about investing in your customers from your business beginning to its end. Customers are essential to the logistics flow. They expect assurance and constant updates about the product. If there is any change in shipment date, delivery issues, then let the customer know about it instantly.

Once an order is placed, make sure the customer can track everything online. Invest in an excellent online shipment tracker to allow your customer to be updated about the website or app, and they need not call customer care every time.

Offer your customers options

Flexibility is required, customers expect retailer to offer many options that can fit their needs and lifestyle. Therefore, it is relevant in order and logistics fulfilment.  A lot of customers abandon their cart while choosing the requisite delivery option; often it is because they did not find the right delivery approach they were looking for. Many want door-to-door shipping options relevant, while others look pick-up as another variable option for them. With many delivery methods, you negate the risk of losing them at the last step.


Spend on visibility and collaboration

Regardless of your strategy, you can’t run an effective supply chain without visibility and the ability to communicate to customers and suppliers quickly.  Collaboration will help you keep inventory low while keeping lead times at a minimum.  Your supply chain is core to running your business.   

Track Costs

Break down your logistics process and have a clear view of what each element costs you.  You can’t control costs if you don’t know where you’re spending.

Also, with this knowledge, you can directly or indirectly transfer the cost to the customer.  You must know how much it costs to move the item from point A to B if you are going to make the right pricing decisions.

Get competitive quotes

Comparing different providers is basic business procedure, but it’s amazing how many SMBs go with the first logistics company that comes to mind.  Use the internet to search for the ideal service provider.  Obtain quotes from multiple carriers and check if the prices are negotiable; make sure you are comparing like for like.  Always get at least two or three quotes for any sizable expenditure.

Planning is the key

Prepare your inventory and choose reliable suppliers as the first step in your logistics chain. Whether you are managing your in-house logistics teams or outsourcing it, you need to have complete control.  Ensure that you review the commitment and forecasts regularly for calculating the safety stock as well as contingency plans in place just in case there are delays or diversions.  That doesn’t mean stockpile inventory, but you should have plans that include alternative sources and the ability to shift goods from one location to another.

Improve sales and operations

Effective sales and operations (S&OP) planning can help you understand when you might need new equipment or overtime.  Accurate forecasts help you plan inventory, so you have enough of the right products in place to meet demand.  The S&OP process can provide insight into upcoming promotions, new product introductions or other demand changes.  With this information, you can ensure you have enough (but not too much) inventory on hand.

Outsourcing

Outsourcing, more or less, the entirety of your logistical needs can free up your time and allow you to focus more on innovating and growing your business.  This may not be the most cost-effective option, but it could be the simplest and most convenient.

Consider teaming up with a partner

Most logistics companies set their prices based on volume, and teaming up with a partner could provide a more cost-effective way to meet your needs.  Take into account not only the specific details of the logistics company, but also the specific needs of your partner. 

Try a small business logistics service from a major provider

If the size and budget of your business cannot warrant investing money in a specialized logistics provider, perhaps it could be beneficial to explore what some of the major shipping and transportation providers offer. UPS, FedEx, and DSL all offer services that cater to small businesses.  Given their reputation for reliability, this could easily be a viable option for your business.

Consider an industry-specific provider

An industry-specific provider would know the specifics on how to handle and care for the product being delivered, especially if it is fragile, perishable or high-value.  You may spend more money on an industry-specific provider, but consider the risk of hiring a provider that does not specialize in your particular market.  If a product is mishandled or damaged, that’s money down the drain.

Work with a third-party logistics company

Many small and mid-sized businesses believe that working with a third-party logistics company (or 3PL) is too expensive for them, but that may not be the case.  A good 3PL can help ensure that you get reasonable rates, fast delivery, and the most productive warehouse and storage teams.  It will have many of the necessary visibility and collaboration tools available to help you; further they can help you with packaging, warehousing, handling, tracking, paperwork, labeling, and even business partnerships.

Leverage Technology

Today it is possible for you to keep tabs on a wide range of events affecting your product’s transportation.  Both you and your customers should be able to tell where the item is at any given point in time.  By giving customers direct access to tracking information, you rid yourself of the burden of having to keep them updated.

Supply chain and logistics are vital for the success of any business.  Without a well-thought-out logistics management plan, you’ll place your entire business strategy at risk of failure. 

Every business must learn to master logistics, all parts work together, to make it more organized, cost-effective, and efficient for both you and your customers, stand out from the competition, and boost customer satisfaction.

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