There is a lot more that goes into choosing the best carrier for your shipment than most people think. When deciding which LTL carrier to work with, many businesses or supply chain managers will only take the upfront cost of transportation into account.
There are a few strategies we will explore that you can use when choosing the best carrier for your company. Here are three simple, strategic ways to reduce supply chain costs:
1. Create a Strategy
You can’t go wrong with creating a solid supply chain strategy to help reduce your costs. Take note of all your suppliers, manufacturers, distributors, customers, and everything else you might need.
Once you have all of that data, map it out.
See where procedures can be simplified, where you can consolidate suppliers, etc. These are steps that could possibly cause delays and extra charges if you do not iron out the kinks.
One of the best places to start here is with your customers. Know their wants, needs, buying habits, etc. Often times companies make decisions solely based on how they themselves operate as a business without taking their customers into account.
This leads to frequent customer complaints, delivery delays, and other costly customer issues.
2. Be Smart with Spaces
When it comes to producing products and delivering them to your clients, how you manage the spaces in your warehouse is key to avoiding any extra costs.
Take a full day to assess your warehouse to see if you are not wasting any. If you think you can organize your inventory in a much more cost-efficient way, then go for it!
3. Reduce DSO and Collect Faster
You can reduce your DSO (days sales outstanding) if you reduce the amount of time your shipment takes to get to your customer. Choosing a carrier with a fast transit time is essential to accomplish this. Finding a carrier with dependable ship rates can allow you to begin collecting right away by offering discounts for those who pay within 5 or so days of delivery.
4. Take Freight Transit Time into Account
It is important to consider transportation time as well as price when you are choosing a freight carrier. If your LTL carrier can provide a faster transit time at a standard or slightly higher rate, you will be able to carry less warehouse stock while improving fill rates. When selecting a carrier, you should compare the money you have spent and saved to see if you are actually reducing your supply chain costs.
5. Outsource Your Deliveries
Next up is outsourcing your deliveries. You might be tempted to create your own freight team because it seems like the cheaper, more efficient option. But you would be surprised at how hard it is to manage your own freight.
Not only will you have to submit permits to drive certain vehicles, but you also need to take the time and budget to hire reliable drivers. Plus the overhead of buying the vehicles and maintenance is enough to make anyone’s pocket hurt.
But you won’t have to worry about any of those if you choose to outsource your freight needs. You can focus on growing your business while the experts manage your goods and make sure that these get to their destinations safely and on time.
6.Reduce Claims
Overlooking a carrier’s claim ratio can cost you both money and client relationships. It is important to do a thorough investigation of carriers and rates, and their damage reduction processes before choosing them. Investigating these carriers can benefit your supply chain. Also, it can impact your ability to expand sales, earn you referrals, and save you money. Using companies like GoShip.com makes it easier than ever to compare LTL carriers.We even offer full-coverage all-risk freight claims insurance to our customers.
7. Avoid Excess Stock
Having a full inventory can be great for your business. You will have a quicker turnaround time for your orders and create a strong, loyal customer base.
But keeping too much stock can hurt your business’s pockets. This is because excess stock can tie up your cash flow. You might even end up paying for additional storage stocks you would not need.
Too much stock can also end up becoming obsolete in the market. Meaning that you will have to start selling your goods at a far lower price.
8. Spot the Inefficiencies
When one piece of your supply chain is inefficient, you end up losing a ton of profit and you probably won’t even catch it until it’s too late.
There is no one way to spot these inefficiencies. It could be in your production line, your suppliers, or even your in-house admins.
It can also come in the form of outdated equipment. If you have been using the same machinery for decades, it might be time to swap those out.
9. Implement Automation and AI
AI significantly reduce supply chain costs and time spent on tedious processes with automation. The rapid development of AI in the supply chain has made moving packages more seamless than ever. From online assistants, robotics, analytics, and autonomous vehicles, AI technology has provided sophisticated solutions to supply chain and logistics operations worldwide.
10. Track Performance
Lastly, you need to track your results. This is how you are able to gather all the data you need to create the perfect supply chain game plan.
By keeping close tabs on your business, you can easily spot if there are any aspects of your supply chain that are causing delays and extra charges.
GoShip is one way to use automation for all your shipping and reduce your supply chain costs. From getting your first quote to delivery, we can save you time and money. Start with a free quote below and see how we can help you improve your shipping strategy.
Creating a Cost-Efficient Supply Chain
Creating a cost-efficient supply chain yourself can be overwhelming. You might not even know where to start. But that is where companies like GoShip shine best. Experienced shipping companies are experts at automation and developing efficient techniques to get your product in front of our suppliers to your clients’ doorsteps.