Logistics and supply chain are an integral part of any business, whether small or big. If even one thing goes wrong in the process, it can cause major losses. Products delivered to the wrong location, packages lost in transit or additional charges on customers, all due to improper planning can cost you your customers. In order to prevent unnecessary losses, companies should invest in proper planning and management of their supply chains. A well-crafted logistics plan helps manage costs effectively and run the operations smoothly, thus ensuring a successful business.
When done with a proper plan, logistics management and supply chain can be a harmonious process involving trucks, vendors and warehouses. Their combined effort will ensure undamaged and timely delivery of products, thereby providing complete customer satisfaction. Here are some of the most important tips for small businesses that will help in effective logistics management, thus promising business success.
Objective – At the outset, you need to be clear about your objectives. Understand the overall strategy of the company and define the goals of your logistics accordingly. Your logistics objectives must align with the objectives of your business. Next, determine whether your strategy is to provide fast delivery or to be a low-cost provider. For fast delivery, you will have to invest more on logistics and shipping, whereas for low-cost services, the focus should be on cost-cutting at all times, at the cost of higher lead times. The overall key is to strike a balance between the two objectives and satisfy customer needs.
Customer Needs – Customer should be your top priority irrespective of the objectives and strategies. Come up with new ways of satisfying your customers, even if you are bound by a specific strategy. Customer communication is critical when logistics comes into picture. Ensure that your customers are regularly updated on the shipment status like shipment date, delivery time, unexpected delays and the same. The way you respond to and handle mishaps plays a major role in differentiating an excellent service from a mediocre one.
Costs–One essential philosophy that every logistics manager must follow is, “keep track of the amount of money spent in every aspect of your supply chain and logistics, and the rest will fall in place”. Break down each of the logistics processes and calculate the total cost. Doing so will help you control costs and make the best use of your logistics strategy.
Collaboration and Visibility –In order to run an effective supply chain, there should be visibility and timely communication with the suppliers as well as with the customers. This holds true irrespective of the strategy being used by your company. Proper collaboration will aid in keeping a low inventory and minimum lead times. Your warehouse management systems and supply chain should be included as one of your core equipments, just like your other key business systems.
3PL Companies – Plenty of third-party logistics companies (3PLs) are available today, so not having the luxury of having your own logistics department, is absolutely not an issue. Many SMEs have an idea that 3PLs are expensive for their business, when in reality, that’s not the case. 3PLs possess the necessary collaboration tools and visibility to help you. Partnering with a good 3PL can help you get fast deliveries, best rates and a highly productive warehouse team. Moreover, 3PLs provide innovative ideas for enhancing your logistics strategies and are always ready to offer these additional services. Explore the different 3PLs, get their quotes, compare them, negotiate and then choose the right one for your business.
Plan – There should be a proper shipping plan in place, so ensure that you analyse and prepare a plan for the coming months. Make sure to have full truckload shipping as much as possible. Alternatively, have some contingency plans as well in case there happen to be truck breakdowns, delays or route diversions. Also be prepared with alternative sources and have the capability to shift goods between different distribution centres. Not relying on just one plan will prevent you from failures.
Competitive Pricing – It is always good to explore your options rather than settling for the very first logistics company you come across. Make sure to check for quotes from multiple carriers, compare the prices and try negotiating. When a company knows it has competition, it will sharpen its quotes and raise the quality of its services in order to get business from you. Evaluate the costs and services according to your needs and then choose your preferred carrier.
Sales and Operations –Another important process to take care of is the sales and operations (S&OP). Ensure that there is an effective planning for S&OP, which will help you keep a track and understand when the need for overtime or new equipments arises. Doing so will aid in effective inventory planning so that you have everything in place to meet the incoming demands. A proper S&OP plan will also keep you updated on new product introductions, upcoming promotions, changes in demand, and so on. With such information, you can be sure that there is enough inventory at all times; not too much and not less than what’s required.
Logistics and supply chain systems can make or break your business operations, depending on how they are managed. Therefore, it is crucial for every business to have an efficient logistics plan/strategy and stay out of unexpected risks. The tips listed above will help you run your business smoothly with a well-working logistics strategy.
– Swathi Bhat