When shipping goods is an integral part of your business, reducing transportation costs by default becomes a top priority. Along with fluctuations in market prices, regulations by governing authorities and regular hikes in fuel prices, there are several other forces at play that ultimately determine the cost involved in transporting your goods.
Optimizing transportation costs, building supply chain agility, and driving profitability for your business requires an eye for innovative yet practical solutions, and the ability to develop sound strategies and implement them successfully.
These strategies or solutions can range from building better relationships with the stakeholders involved in your supply chain and improving your inventory management to adopting smarter tools that facilitate automation across workflows, etc. At the end of the day, what matters the most is having clarity over what you can do and what you must do to realize your ultimate goal of reducing costs.
Here is a list of six practical solutions that you can explore to reduce transportation costs:
1. Try to ship more, less often
Larger the shipment, more the savings. Convince your customers to place larger orders and if possible, try to incentivize these orders. Shipping 10 containers at a time will always be more profitable than shipping two containers for five days. Yet another way to approach this is to better use the storage space by optimizing packaging and stacking.
By improving the way you use your storage space, not only will you be able to ship more goods but also minimize the chances of those goods getting damaged in transit. Work towards eliminating vacant spaces and try to increase the density of storage.
2. Build flexibility into your chain by using multiple modes of transport
Typically shippers tend to rely on a single mode of transport. Having rarely explored the possibility of using multiple modes of transportation for a single shipment, they fail to discover the value it can provide.
Wherever there’s scope, you can check the transport costs for different modes. For instance, you have to ship a large order but only a part of it requires urgent delivery. In this case, you can consider using air transport for the goods that require quick delivery and the remaining goods can be shipped by ocean, a much cheaper option. Similarly, in several cases, rail transportation is more economical than trucking.
The key is to reduce the usage of more expensive modes of transport whenever possible and use a combination of services to drive savings while simultaneously building flexibility into your operations.
3. Prioritise customer satisfaction
Strive towards exceeding your customers’ expectation as it is directly related to the growth of your business and the ability to drive savings. By keeping your customers happy you are not only serving their interests but also paving the way for better negotiations, improved business ties and most certainly creating scope for implementing practices that will help you reduce costs. Thus, never overlook the correlation between happy customers and higher cost savings.
4. Leverage digital automation technology
By adopting automation technology to load and unload containers, manage warehouses etc. you can reduce costs and also minimize product damage. It can help boost the efficiency of operations and drive down overall costs involved in the production process.
Moreover, digitizing and automating inbound and outbound logistics processes such as negotiating freight rates, shipment tracking and invoice reconciliation by using a Transportation Management System (TMS) can further help you optimize your transportation cost. These systems will make it possible for you to streamline your operations and ensure process efficiency. It will also lead to a massive effort reduction for your team and allow them to focus on other tasks.
5. Enhance operations with advanced data analytics
Present-day supply chain management is inevitably driven by data analytics. Once you digitize your supply chain, the system will record several data points for you. Make it a point to review historical data, and draw comparisons from it w.r.t your present-day performance. This will allow you to identify your best service providers, spot unnecessary expenses, and further help you make well-informed decisions.
6. Gain end-to-end supply chain visibility
You can effectively reduce unexpected costs by achieving end-to-end visibility on your supply chain management. This would imply having access to real-time information at all points in time about everything that’s happening in your logistics network. By having visibility, you can better manage transportation costs, avoid disruptions and gain valuable business insights.
Better late than never
If you haven’t proactively thought about reducing your transportation costs before, now is the time to consider it and gain a competitive edge over other players in the market. As the logistics industry continues to evolve and leverage technological advances, you must keep pace with these developments and use them to your own advantage.
If you would like to learn about how GoComet’s innovative digital automation solutions can help you reduce your transportation spend and streamline your operations, reach us here today!