When it comes to managing a small business, there are many logistics to keep track of. And if you’re an entrepreneur who’s running the business on your own, you’ll have all the responsibility of making sure that all of those logistics work together in harmony to build your brand and deliver quality products and services to your customers. Here are seven ways to optimize your small business logistics practices.
What is small business logistics?
Logistics is the process of sourcing, transporting, storing, and delivering the supplies and products for your business For large businesses, it is stressful to balance good logistics with profit. This is exaggerated even more for small business logistics, since small businesses don’t have the bulk purchases or the influence to get cheaper services.
Small businesses also often don’t have the staff to manage every part of the process, which can lead to overworking when everything is done in-house.To cope, small businesses have to be more careful with planning and executing their logistics.
Some small businesses also outsource to third-party logistics companies (3PLs), or partner with companies that specialize in certain parts of the logistics process, like shipping. Let’s dive into our 7 Best Small Business Logistics Practices.
How to optimize small business logistics
There are 7 ways to optimize small business logistics: know your company, plan every single aspect, make manufacturing more efficient, manage long-term finances, understand your customers, partner and outsource to other businesses, and utilize data analytics.
Know your company
The first way to optimize small business logistics is to know your company so that you can plan accordingly. This is the foundation of all other strategies, so be thorough and take your time.
Knowing your company consists of the following:
- Pinning down your target market.
- Planning a business strategy to attract your target market.
- Finding out how important logistics is to your business strategy (e.g. will you rely on fast shipping, or on affordability).
- Learning what qualities are important in your logistics suppliers.
- Investing in logistics accordingly.
By doing the prepwork, you’ll be able to address your needs more accurately, and you’ll save time and money in the long run. For example, let’s say that you know that for every $1 of logistics spending, $5 is returned on investment (ROI).
Plan every single aspect
The second way to optimize small business logistics is to plan every single aspect so that your operations go as smoothly as possible.
Here are some factors that you’ll need to plan for:
- Inventory: eliminate all unnecessary inventory, and plot out what inventory you’ll need and by when.
- Suppliers: choose suppliers based on service, cost, efficiency, product quality, and other important factors like sustainability.
- Receiving Shipments: plan to ship so that you can group orders and pay less.
- Inventory Management: organize your inventory with automated software to prevent disappointing customers
- Delivering Orders: maximize shipments for each month and allow customers to track their orders online.
Planning will help you reduce costs and improve customer satisfaction by making sure that everything runs smoothly on a day-to-day basis—which will lead to more sales over time.
Make manufacturing more efficient
If your company manufactures its own line of products, you can save yourself money and time by making manufacturing more efficient, which is the third way to optimize small business logistics practices.
This can be done in two main ways, depending on if you do in-house manufacturing or if you outsource manufacturing.
If you do in-house manufacturing, you can make it more efficient by:
- Analyzing your current setup’s strengths and weaknesses.
- Determining what can be easily automated.
- Solving menial, manual tasks with software, robotization, and other automation technology.
If you outsource manufacturing, you can make it more efficient by:
- Noting down what you ideally need and want from a manufacturer.
- Analyzing your current manufacturer’s strengths and weaknesses.
- Researching and comparing them to other manufacturers.
- Deciding on the most efficient manufacturer in terms of money, time, and product quality.
Manage long-term finances
The fourth way to optimize small business logistics is to manage long-term finances. This is key because, by investing in the correct areas and saving on others, you will be able to sustain and grow your business for years to come.
Here are a few ways to manage your long-term finances:
- Organize your expenses into different categories.
- Analyze how much you spend on each category (purchase price, shipping fees, etc.).
- Research on potential suppliers.
- Negotiate with suppliers and ask for at least 2-3 quotes so you can get the best deals.
- Utilize finance software to easily organize your expenditures, as well as send and receive payments.
- Manage assets like office equipment, and make sure you save up for future replacements.
Understand your customers
The fifth way to optimize small business logistics is to understand your customers.
You may not have as much influence as a large corporation, but you do have a closer relationship with your customers. You can use this knowledge to develop an edge over larger businesses.
Understanding your customers can take the form of:
- Making several options available for products, as well as customization where feasible.
- Providing multiple delivery methods so that customers can find the one that works for their location, schedule, and budget.
- Updating your customers constantly about their order, its delivery, and any issues that are encountered.
- Adjusting your inventory, systems, or service according to feedback from your customers.
Partner with or outsource to other businesses
The sixth way to optimize small business logistics is to partner with or outsource to other businesses.
By doing so, you avoid having to hire more staff, and you benefit from the expertise and resources of businesses that specialize in logistics.
Most companies prefer to outsource to other businesses, which:
- Shortens lead time.
- Reduces the time you have to spend on overseeing logistics processes.
- Decreases expenses since a third-party logistics company (3PL) can ship more efficiently and thus more affordably.
- Increases customer satisfaction since a good 3PL gets orders to customers quickly.
Other companies prefer to partner with other businesses, which has the same benefits as hiring a 3PL, but it also ensures that you’ll always have a trusted logistics provider who is invested in the success of your business.
However, partnerships can take much longer to finalize, and you may struggle with logistics in the meantime.
Utilize data analytics
Where can you find good logistics providers?
If you are looking for good logistics providers to transport your supplies and products, the easiest way to find them is by using a freight shipping marketplace like GoShip!
By allowing you to compare multiple freight carriers’ services, prices, and details all on one site, you’ll be able to find the carrier that is right for you in no time.