5 Mistakes You Need to Avoid While Reducing Logistics Cost
For the growth of any company there are certain operations which should be given top priority in order to gain positive results. Costs are needed to be controlled so as to maintain a higher chance for profit. Logistics management deals with activities related to storage of goods along with procurement and transport. Do you think the reduction of logistics expenses is a good way to manage cost? Many companies do follow this notion and even work on it. In reality, it is one of the biggest mistakes which should be understood and corrected. The actual logistics cost is hidden in the fuel surcharges that are fixed and cannot be mended. But there are solutions to this problem which can surely help to reduce logistics cost. Similarly, there are several mistakes surrounding the logistics process that should be avoided.
1. In-House Logistics
Mistake: For a company that is handling international trade, the movement of goods across borders does count expensive. This is a problem which is faced by numerous companies that are part of the international market. If your company consists of an in-house logistics, then there are huge chances of higher costs.
Cure: The most effective cost saving technique is to outsource logistics to an expert supply chain. There is a certain need for an expert in international logistics who is well aware of the basic norms. Under the logistics department there can be certain issues which can arise due to various reasons. An in-house logistics might not tackle such an issue alone. This additional stress can be very well managed by the experts at the supply chain under a controlled cost.
2. Overcharging by Customs
Mistake: This mistake is not that much highlighted but is made by several companies. The classification of goods isn’t done correctly on the commercial invoice which leads to unnecessary taxes that directly increase the cost. If some company complaints about import duties and tariffs, then they must surely go through all the stated terms related to it.
Cure: To avoid overcharging and bringing your logistics cost down you must manage the goods according to the custom standards. This will ensure the clearance of your goods in a cost-effective way. If your company deals in large-scale imports, then such measures are required so as to save a lot of cost.
3. Incorrect Procurement
Mistake: Cost of logistics enhance when carelessness at the storage centers is prominent. Suppose your products are packaged, shipped and received at the exact location. But it is later found out that the paperwork isn’t incorrect. Another case when some parts of the order are different or missing from the consignment. All of this is counted under processing error which can lead to higher logistics costs as the parcel might be sent back and everything will proceed from level one.
Cure: Correct procurement of goods is important which can reduce this addition logistics cost. You can fix a particular group of experts who can carefully check the products along with the paperwork that is involved in overseas trade. One can also take the help of a logistics partner in order to prevent such issues.
4. Non-Involvement of Automated Compliance Processes
Mistake: If your company is not using software solutions for trade compliance issues, then it can surely affect the logistics cost. Manual preparation of documents can take a lot of time that can delay delivery time along with lesser inventory levels.
Cure: The companies that have successfully implemented software solutions experience speedy outputs. On-time delivery along with the quick elimination of logistics errors is ensured through the inclusion of automated compliance procedures. Increased customer satisfaction is another aspect that is highlighted through this important addition.
5. Single Platform Availability
Mistake: If the key stakeholders aren’t managed at a common platform, then the supply chain techniques might not come into effect. Companies that are not operating on a single platform are surely wasting their resources. No integration leads to a vulnerable system due to the transfer of information through various channels. This process is time-consuming as well which leads to higher costs.
Cure: Data intelligence is very necessary that can function onto a single platform for positive results. Trying to curb duplication in order to secure the system is an important step. Time is saved by transferring information onto the common platform so as to reach all the connected stakeholders.
The above-stated points are some of the common mistakes which should be cured in order to reduce logistic costs. These mistakes might not appear that much prominent but have a major effect on the overall logistics cost. You need to be alert and aware in order to prevent such situations. Always remember that for every problem there is a cure that is available through patient analysis.