By Dixie Somers
Unless you are a business that functions solely online, you need to have a logistics plan in place if you want to make your customers happy and allow all the other elements of your business to run smoothly. Shipping products and materials between warehouses, offices and consumers can become a costly endeavor without a proper plan. If you are a small business owner or entrepreneur who needs to learn of logistics before you waste any money, read on to get the skinny on how to master logistics for your business endeavors.
Keep a Detailed Budget
In order to start saving money on logistics, you will need to know exactly how much it is costing you. Perhaps you’ve included logistics as a part of your budget, but only as a general expense. Obtain an itemized invoice for all logistical services like warehouse fees, deliveries, shipping, etc. Work these things into your budget and consider areas where you might be able to cut costs. By keeping a detailed budget you can use it to see exactly which logistical functions are costing you the most money, giving you a good idea of where to focus improving first. Closely examine each level in your logistics chain and ensure that you are getting what you are paying for. If there are any hiccups or constant errors at any level, you might consider dropping you current service and finding another that is more efficient or more reasonably priced. Once you develop a plan for logistical improvement, you will see improvements in your bottom line.
Always Research Costs First
One of the worst situations a small business owner can put themselves in is estimating a shipping cost on a quote instead of researching it properly. If you estimate the cost lower than it actually is, you are going to cost yourself money and potentially erase all profit you are making on the order. If you estimate the cost too high, you may be providing a quote that’s not competitive enough to win the order. Do the proper research so your quote can be as accurate as possible to benefit both yourself and your clients. Settling for the first quote you get could end up costing you money and upsetting your clients—two issues you don’t want to deal with.
Consider a Contract
Small businesses account for a great deal of the volume provided by shipping companies like UPS, FedEx and the United States Postal Service. It is an incredibly competitive business and many of them are happy to offer significant discounts if you are willing to sign a contract to use them for all your shipping needs. Shop around and make sure to ask for base incentive discounts, which are typically a discounted for each item applied as a flat percent, but aren’t always offered in a contract unless you specifically ask for one. Don’t miss out on benefits and price cuts just because you are unaware of logistical services available for small businesses—this is another research why serious research is key in keeping your logistics running smoothly.
Utilize Business Software
Microsoft Excel or a pen and paper can give you a solid start on your logistical planning, but to take it to the next level you will need proper business software. You can organize and automate everything and give any employees access to view or edit orders as well. There are plenty of planning software priced specifically for small businesses, some are even completely free. Some notable software to look at includes Flow, Asana and RescueTime. Another key to a successful logistics system is to have detailed and accurate documentation that can be available to several departments. This type of software will provide you with helpful documentation that will eliminate headaches if any issues happen to come up with your logistics.
Your supply chain is only as strong as its weakest link. Work hard to network with your vendors and suppliers to make sure you can use the developed goodwill to develop favors and discounts when you are in a bind. Try to forge relationships with experienced professionals who will be able to treat you as a partner, not just another small business customer. As mentioned before, if you are having any problems at any level of the logistical process, you might need to reevaluate your needs and decide whether or not your vendors are fulfilling those needs based on what you are paying them. Switching services could be the move that will allow your logistic system to run smoothly and eliminate any efficiency problems you are having.
Logistics can seem like a burden, but it can also be a competitive advantage. By optimizing your processes you can decrease shipping costs, passing them onto the customer and making your products as competitive as possible. A customer will appreciate receiving their products quickly at a fair price, and keeping customers happy is the most important thing a small business can do. The information for this article was provided by the logistic experts of Arpac who offer warehouse and storage equipment like pallet racking and forklifts in Edmonton.
Dixie Somers is an Arizona-based freelance writer. Follow her @DixieSomers.