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What’s the best route to ship your products from Point A to Point B?
A key factor in your company’s overall profitability is how well you handle the logistics end. Miscalculations there can undermine the great work you’ve done in terms of manufacturing, marketing and all the rest.
Factoid
Around the world, last-mile operations account for around 40+ percent of the entire supply-chain cost.
The variables can be daunting.
They begin with your basic options for shipping products: by land (rail, truck, etc.), sea, air or some combination thereof. This choice is primarily driven by your relative need for either greater speed or lower costs.
And although part of your decision making is an objective dollars-and-cents calculation, you also need to consider subjective aspects, such as customer satisfaction – how important speed is to your particular customers compared to cost. So it becomes a balancing act.
Also, the actual numbers may be surprising. For example, while this may not apply to your specific situation, on a global basis last-mile operations in general account for an incredible 40+% of the entire supply-chain cost. Never assume, then, that what you think is likely the case actually is. Nail down the real-world facts and figures.
Look for creative ways to minimize costs.
For instance, if you have multiple suppliers, see if it would make sense to consolidate all their products in one location then shipping everything out together.
Think, too, of ways to adjust on the fly. Let’s say you suddenly have an urgent need for inventory but express shipping is far too expensive. One solution: get enough product for your most immediate needs by shipping express, then have the balance sent by slower, less-costly means.
Got small quantities? Think about forming a partnership with third-party freight brokers who get volume discounts. In exchange for your business, they might pass those discount rates on to you.
Also be sure to check out ports and shipping-service centers near your location. Be aware, though, that some shipping services may be inclined to serve their own interests over yours. They might, for example, offer you ports that benefit them to use but may, in fact, add to your timeline and cost totals.
So always ask exactly how their proposals to you will optimize your shipping. Most companies of this kind are honest and straightforward, but it pays to keep your eyes open.
Conduct a cost-benefit analysis.
If the only factors were tangible like monetary costs, a cost-benefit analysis would be relatively easy.
But since you need to include things like customer satisfaction, the process becomes more subjective even if you manage to assign a dollar amount to each of the intangible benefits. Some companies find it useful to include “what-if” scenarios which can head off the unexpected. It may be wise, therefore, to do more than one cost-benefit analysis to cover various contingencies.
Don’t overlook shipping insurance.
Insurance spares you from incurring additional costs associated with loss or damage to packages and/or their contents.
Far and away the main benefit to you is peace of mind. You have enough to worry about without having to wonder if the gamble of skimping on insurance is worth it. It isn’t.
Not only will you save money in the long run, you won’t have the hassle of dealing with claims and/or with unhappy customers (Hell hath no fury like).
Also, happy customers are likely to become repeat customers so insurance can be legitimately viewed as making you money.
Wishful thinkers may figure that they’ll somehow be an exception when it comes to the need for shipping insurance, but the real world has other ideas. It sees their bubbles burst every day.
