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How do you leverage technology to reduce distribution costs?

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Distribution costs can make or break your business, especially in a competitive and dynamic market. You need to find ways to optimize your distribution channels, reduce your operational expenses, and improve your customer satisfaction. Technology can be a powerful ally in achieving these goals, if you know how to leverage it effectively. In this article, we will explore some of the best practices and tools that can help you lower your distribution costs and boost your performance.

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Alex Forrest

Warehousing and Fulfilment Solutions with Robotics & Automation || Average global ROI of 2 years || Free 20min concepts…
Jasper Balkenhol

Boosting brands on commerce platforms and social media | Managing Director at eBazaaris
Ed Teixeira

UK Manager | Industry can do it

1 Automate your processes

One of the main drivers of distribution costs is manual labor. You can reduce the time, errors, and risks involved in handling your inventory, orders, deliveries, and returns by automating your processes. For example, you can use barcode scanners, RFID tags, or QR codes to track and manage your products throughout the supply chain. You can also use software systems, such as ERP, WMS, or TMS, to integrate and streamline your data, workflows, and communications across your distribution network.

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Alex Forrest

Warehousing and Fulfilment Solutions with Robotics & Automation || Average global ROI of 2 years || Free 20min concepts ||
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90% of warehouses aren't utilising automation at all. With automation you could reduce your requirement on labour 50%+ and massively reduce your costs per pick, % errors and improve inventory accuracy. Accuracy can be improved using barcode scanning and G2P automation where you can end up with 99.9% accuracy, this will reduce returns hugely. There is a huge number of advantages of automation. I'd recommend speaking to peers and suppliers to see what quick and easy solutions could help.

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Ed Teixeira

UK Manager | Industry can do it
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Some of the warehouses have difficulties going from manual operations to full automation but some simple solutions have a big impact and simplifying processes will make all full operations more efficient. Divide the operation and small areas will make it easy to understand what the next steps are.

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2 Optimize your routes

Another key factor that affects your distribution costs is transportation. You can save fuel, time, and money by optimizing your routes and schedules based on traffic, weather, demand, and capacity. You can use GPS devices, mapping software, or route planning tools to plan and monitor your deliveries and pickups. You can also use dynamic pricing, flexible delivery options, or shared transportation services to balance your supply and demand and reduce your idle or excess capacity.

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Jasper Balkenhol

Boosting brands on commerce platforms and social media | Managing Director at eBazaaris
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Technology plays a key role in reducing distribution costs. Route optimisation through the use of GPS and specialised software solutions such as Route4Me or OptimoRoute is particularly effective. These enable precise planning and adjustment of delivery routes in real time, which not only saves fuel but also shortens delivery times. In e-commerce and online marketplaces, this can lead to a significant reduction in costs. In addition, the integration of dynamic pricing models and flexible delivery options helps to respond to fluctuations in demand and avoid overcapacity. Close cooperation with logistics partners who offer digital solutions reinforces the effect and promotes a more efficient distribution strategy.

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3 Analyze your data

Data is the fuel that powers your distribution strategy. You can use data analytics, dashboards, or reports to measure and improve your distribution performance, efficiency, and quality. You can track and evaluate your key performance indicators, such as order fulfillment rate, inventory turnover, delivery time, customer satisfaction, and distribution cost per unit. You can also use data to identify and eliminate bottlenecks, waste, or errors in your distribution processes and channels.

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Ed Teixeira

UK Manager | Industry can do it
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A Warehouse Management System (WMS) is a useful tool that can help make informed decisions. There are many scalable solutions available in the market, but it can be challenging to decide on the right one that meets the current needs and is future-proof. However, without proper data, it's tough to make informed decisions for the future.

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Jasper Balkenhol

Boosting brands on commerce platforms and social media | Managing Director at eBazaaris
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Data analysis is key to effectively reducing distribution costs. In the e-commerce sector, the use of analytics tools such as Google Analytics or BigCommerce Analytics makes it possible to precisely monitor key performance indicators. Key figures such as the fulfilment rate of orders, stock turnover, delivery times and customer satisfaction are particularly important. By identifying bottlenecks and inefficiencies, processes can be optimised and costs reduced. Another advantage is the ability to use data analysis to improve the customer experience and create personalised offers, which in turn strengthens customer loyalty. Tools such as Tableau or Microsoft Power BI can help visualise complex data and facilitate strategic decisions.

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4 Engage your customers

Your customers are the ultimate judges of your distribution service. You can use technology to enhance your customer experience and loyalty, and reduce your customer acquisition and retention costs. You can use mobile apps, websites, or social media to provide your customers with convenient and personalized access to your products, information, and support. You can also use email, SMS, or chatbots to communicate with your customers and keep them updated on their orders, deliveries, and feedback.

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5 Innovate your solutions

Technology is constantly evolving and creating new opportunities and challenges for your distribution business. You can use technology to innovate your solutions and gain a competitive edge in the market. You can explore new technologies, such as artificial intelligence, blockchain, drones, or robots, to automate, secure, and speed up your distribution operations. You can also experiment with new business models, such as subscription, rental, or circular economy, to diversify your revenue streams and reduce your environmental impact.

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Jasper Balkenhol

Boosting brands on commerce platforms and social media | Managing Director at eBazaaris
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Innovation through technology is essential in e-commerce in order to reduce distribution costs. One approach is the use of AI for more precise demand forecasting and inventory management, which minimises overstocks and stock-outs. Blockchain technology enables a transparent and secure supply chain, which builds trust with customers and partners. In addition, drone deliveries offer a fast and cost-effective alternative for last-mile solutions, especially in hard-to-reach areas. Experimenting with new business models, such as subscription services, can encourage customer loyalty while reducing returns. Tools such as Shopify for subscriptions or Magento for flexible e-commerce solutions support the implementation of these innovations.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you leverage technology to reduce distribution costs?

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1 Automate your processes

2 Optimize your routes

3 Analyze your data

4 Engage your customers

5 Innovate your solutions

6 Here’s what else to consider

Distribution Strategies

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