What are the most common logistics costs and how do you optimize them?

the local transportation, international transportation, warehousing and the taxes, so if you are looking for cost optimization and reduction, pay attention to the packaging. Lots of opportunities to reduce freight and WH costs, that usually people do not pay appropriate attention

Most probably, the transportation cost is depending upon the nature of the product. The mode of transport will be decided based on the product type.

Be loyal and consistent. Cost is important but it's not everything. Too often we look for the best price rather than the best value. Build a relationship with your carriers. Always be transparent. Be willing to adjust or customize your packaging or shipping methods to meet carriers requirements, it could save you a pile of heartache and money.

Optimizing logistics costs requires a holistic approach that considers the entire supply chain. Regularly assess processes, technologies, and partnerships to identify opportunities for improvement. Collaboration with stakeholders and continuous monitoring of key performance indicators will help you make informed decisions for cost reduction and overall efficiency enhancement.

This is a tricky one to offer much perspective as situations can differ so much from business to business. I always circle back to the importance of relationships on these concepts. Read anything you can get your hands about the early days of toyota. Their approach, really it was a philosophy and lifestyle about inventory control and flow is practically a religion. I have used professionally many of toyotas JIT methods. Don't be afraid to lean in vendors. I always meet with vendors to explain order replacement methods as well as expectations. Establish and commit to doing your part to not always be the guy with supply emergencies. Save those for when you need them, don't cry wolf.

In a smooth supply chain system inventory automatically going on to be optimized, but shall bear in mind that keeping the inventory system alive and sufficient in a bad market situation is an Art

Toyota philosophy is worth reading ; it touches on all aspects of the supply chain management especially in organization with large supply markets.

Inventory costs are often a big problems in companies, but this is overlooked. It leads to obsolescence. One area to look at is common inventory accross various plants for example, in the same area. This will help reduce transportation costs because there will be less transportation as inventory is mutualised accross several locations. It requires some standardisation of products needed accross the said plants.

I would like to think poor integrated demand planning is the root cause of all inventory related issues, leading to either stock outs or obsolence, impacting the bottom line and customer service.

Negotiate Negotiate Negotiate I have long made it a practice to be transparent with vendors that have a direct effect on my costs. Software is a big one. Ask for a better price, you will be surprised how often one is given. In the past I have Negotiated extended terms with blanket commitments. More importantly always do what you said you will. Don't make treats for price shopping benefits. If some is more money make then explain what additional value they bring. Both sides can win, always. Once you commit don't keep shopping. The time spent for a little or even marginal savings will be lost on in-house chages or process interpretations.

Order fulfillment costs include the total charges & expenses calculated for receiving inventory, storing products, processing orders, picking, packing, and shipping of all orders and inventory. Optimisation can be done using e-fulfilment.Depending on the scale of operation,large operations can use 3PL e.g 3PL can promptly fulfil and ship client's order that may come in through the website since they have economies of scale and infrastructure,in buildings and technology to support business growth. E-fulfilment center can provide special software that allows for automated importing of fulfilment order from each client's shopping cart system and then returns the resulting fulfilment tracking and updated inventory back to the client's cart.

Low level service, never win at the end. Never do cost cutting by omitting the TMS , WMS in logistics industry. Any clients will know the benefits of order fulfillment in mid-term.

It is of paramount importance to assess the efficiency of your existing processes to understand how orders are being managed. Often, we meticulously plan various logistics aspects but overlook regular testing. Performing straightforward tests, like placing orders at random times and on different days of the week, can be invaluable in pinpointing areas that may require improvement. Such tests provide valuable insights into the real-world performance of your logistics operations.

For Example Amazon's use of robotics for efficient picking, demonstrates how technology bolsters accuracy and expediency. The incorporation of lean techniques like batch picking, akin to Wall mart's streamlined in-store replenishment, showcases how industry leaders enhance efficiency. Additionally, the mention of packaging's role in waste reduction echoes UN's sustainability initiatives , while KICT's real-time tracking resonates with transparency. This explanation, mirroring practical experience, succinctly distills the essence of order fulfillment optimization, offering invaluable insights to seasoned professionals.

I agree with the points made here. We introduced three steps internally to reduce our compliance costs: Centralizing compliance management. Automating repetitive processes. Outsourcing some parts of compliance tasks. These helped us reduce compliance costs and improve our overall compliance posture.

These cost can sometimes be completely the opposite of the value they bring. I like to think of these like a CPA or a safety consultant. Utilized outside agencies whenever possible. They are expensive but the benefit is they become the accountable party and they will always have the newest information on the category they function in. "Surround yourself with the best people you can find, delegate authority, and don't interfere as long as the policy you've decided upon is being carried out" Ronald Reagan

Hire in-house Compliance experts and grow your team. This equips your businesses to navigate the complexities of international trade, ensure regulatory compliance, enhance operational efficiency, and gain a competitive edge in the global marketplace. By investing in trade compliance expertise, businesses can mitigate risks, seize opportunities, and achieve sustainable growth and success in international trade. You are now empowered with a well-equipped team to train and educate staff and partners on the compliance requirements and best practices.

Thank you for sharing. @Jim Huckle well spotted. High return cost can also be an indication of quality of the product, packaging, handling etc. All of which once investigated and corrective action/improvement process put in place will reduce the cost and customer service.

To put it as a mantra, “Compliance never takes a holiday”. You have to stay on top of things here not only to ensure you’re not doing anything illegal but also to actually save time and costs.

There is also the action of, collaboratively, agree with the vendor, who is best placed to manage certain risks. FX is often more managed and therfore better managed by large client than supplier. Manpower training/ high turnover issues by vendor , but articulate the way this is done to build loyalty.

Risk management associated with safeguarding materials and components is often overlooked and underfunded. So many components are critical path linked, expensive, and long lead in nature, Defending them from theft, environmental conditions, and from misallocation is only the beginning of my work I need to address at each project. Please consider the transient period when designing and packaging your products. If you smartly design the product's packaging/containerization to include durability for the last mile and laydown, then you help me prepare for what i call "the last week." Similar to the last mile. Don't buy and use the cheapest pallets. Treat your product with respect. Weatherization of cardboard containers is often overlooked.

A good supply chain team will be able to build a case for cost savings, and present it to the business and discuss the risks and rewards to following the changes. With this knowledge the business can decide on whether they want to take the risk and accept the reward or continue to mitigate the risk and keep things status quo. With the current situations, businesses will probably lean more to accepting the risks especially when faced with cost savings.

The primary challenge lies in quantifying risks and presenting them to upper management in a manner that highlights their impact on financials. Frequently, what might appear as a substantial risk isn't effectively conveyed to decision-makers, resulting in delayed approvals needed for risk mitigation. Effectively conveying the gravity of these risks is pivotal.

Just as we insure our homes, businesses must mitigate risks. For instance, a paint maker diversifies suppliers after a factory fire. Regular risk assessments, like weather forecasts, prepare for disruptions. Creating backup plans, like spare tires, avoids surprises. Allocating resources, like saving money, builds resilience. Technology, like GPS, tracks risks. Sharing info with partners, like friends sharing directions, aids collective navigation. This guide provides actionable steps, vital in securing supply chains. there are various techniques for risk mitigation for example in KICT there is reduction in speed of cranes at certain areas and every time crane moves there is an alarm is an example of risk management cost. These are very smal

One area not mentioned are reverse logistics costs, or put simply returns! High returns costs can adversely impact gross margin by several % points. Equally, reducing returns can not only improve GM but also enhance customer satisfaction. Offering a simple and robust returns process is essential to any on line retailer, particularly as research shows that shoppers purchasing choice is influenced by the sellers returns policy!

Did AI know the economic environment? No. Also, no matter of the above reason, it still have a lot of another reason can affect the logistics cost, like the products selling in the market is good or not....

The most popular phrase comes to mind. “Don’t bite more than you can chew” The traditional norm that is accepted is the more units of products and services provided, the more difficult to maintain quality” In order to control costs when transporting goods and providing services, there needs to be a minimum dwell time it takes to process a client order. This allows the company to establish target to produce a x number of output per hour, per day or per month. Implement controls to measure a key performance indicator. This will provide a level of consistency in output without compromising quality. There are always expectations with time, break down of network, labour issues that can disrupt productivity but overall, organisation cope.

Labour Automating manual processes, cross-training employees, and right-sizing staffing levels based on demand cycles can help optimize labour costs. Another key is analyzing which cost offers the most saving potential and then gradually implementing continuous improvements.

Sustainable supply chain should be much more in focus. Not only when talking about the production of the products, but the complete value chain and all the links.