Globalization has taken over the world. It has allowed consumers from any country to order products from every part of the world. While it is great for consumers, it can be a logistical nightmare to ship and distribute consumer goods. It is also an expensive affair if you are a small- to medium-sized company.
Here are 6 tips to reduce logistics costs in consumer goods distribution:
1. Join Forces with Other Shippers
Have you considered collaborating with other shippers to send loads in one shipment? It sounds like a weird idea to join hands with other shippers, even your competitors, but it will help you cut costs.
As a small company, your freight volume may be lower. This means high-cost, less-than-truckload (LTL) shipments.
Collaborate your loads with firms that are moving their load to the same customers. It will help in shifting from LTL to full truckload and lower-cost transportation. This will reduce your freight costs. Use commercial weighing scales to know the exact weight of your load.
2.Integrate Data from Sales Systems
Work on allocating available inventory against current orders. It is not an easy task and can get quite complicated. Integrate sales and inventory data from multiple systems to make critical business decisions.
Combine this data with your company’s knowledge of retail customers. This will enable you to make decisions based on customer priority.
3.Try Cross-Docking the Freight
Cross-docking is an effective way to reduce logistics costs. It is the practice of unloading goods from inbound delivery vehicles and directly loading them onto outbound vehicles.
If your company lacks the resources to manage cross-docking, work with a 3PL partner. They have the knowledge and resources to put a cross-docking strategy in place and reduce logistics costs.
4.Have a Packaging Unit in the Distribution Center
Retailers don’t want to sell products in the same configuration in which they leave the factory. They ship the products from the distribution center to the packaging firms and back to the distribution center. This process increases freight costs. Moreover, you can also lose visibility of the product during the packaging process.
You can eliminate this issue by packaging the products in the distribution center itself. You will save money on freight costs and prevent possible damage or inventory loss.
5. Reduce Chargebacks
Large Consumer Packaged Goods (CPG) companies have the resources to monitor chargebacks. If you don’t have similar resources to focus on chargeback reduction, you may end up accepting chargebacks.
Tie up with a logistics company that ships for multiple CPG manufacturers and police outbound shipments. 3PL input also can be valuable in accessing the data needed to ensure the accuracy of the charge and support penalty challenges.
6. Increase Order Volumes
When the customers are happy, you will see a surge in the orders. Focus on improving customer service to increase the order volume. Use digital customer experience feedback and analyze it to identify different areas you can improve. Digital logistics also allows for better visibility and transparency. You can cut costs and increase customer service levels.
Logistics costs don’t have to make a hole in your pocket. These tips will help you reduce logistics costs by a great degree. You just need to implement the right strategies that work for your business. Soon, you will add up significant savings.
