Logistics management is one of the most crucial factors impacting operating costs for the majority of industrial commercial enterprises. Under the evolving pressures of information technology and online retailing, adhering to old, tired logistical business models is bound to incur significant blows to company profit. Perfecting modern methods of logistics management has proven to save immense costs for many well-known multinational corporations (Amazon, Alibaba etc), allowing them to both better serve their customers and attract more consumers. Today, we’ll be presenting five major techniques in logistical management to boost company profit, all of which are commonly utilised by many successful companies. These relevant tricks are sure to prove effective in reducing costs and promoting profit, and are noteworthy for any and all SMEs.
The Process of Logistics Management
Logistics management, also known as operations management, refers to the entire process from the “purchase” to “delivery” stages of business operations, encompassing the flow of goods, information and capital – all of which can influence company costs and expenditures. Being able to seamlessly execute the management and integration of such processes allows companies to simplify procedures, reduce costs, optimize sales, bolster efficiency, among other substantial benefits.
The aspects of logistics management are varied and include many steps. These can generally be summed up into the following 9 categories:
- Purchase Management: Formulate a procurement plan and sales scheme, confirm quantity and quality of merchandise procurement, and determine technical standards for delivery times and locations.
- Shipping Management: Establish methods and routes of transportation. Formulate accommodations in loading methods and vehicles for goods that are fragile or require refrigeration.
- Storage Management: Determine storage methods for raw materials, partially-finished items, including the monitoring of inventory and its environment.
- Handling Management: Regulate the design of and equipment plans for handling systems.
- Packaging Management: Select the material and design of product packaging. Establish automation and standardization of packaging.
- Manufacturing Management: Standardize operating, manufacturing and processing procedures.
- Delivery Management: Select location of collection centres, optimize the delivery and distribution process.
- Logistics Information Management: Establish real-time management over product reception, pickup, inventory and returns.
- Customer Information Management: Study and analyze customer feedback regarding company logistics, then identify and tweak customer needs accordingly.
The Five Major Techniques in Logistical Management: Minimize Costs, Maximize Profits
Surface-level, easily identifiable logistical costs are merely the tip of the iceberg – in reality, there are many hard-to-estimate and even invisible costs, including those related to raw material logistics, distribution logistics, reverse logistics, handling spendings, plant depreciation and more. Although these costs cannot be eradicated in one fell swoop, there are ways to effectively tailor logistics management to allow for the minimization of excess costs, in turn enhancing profit.
Technique #1: Immediate Production
Avoid manufacturing bulk amounts of goods to stock up on in advance before customers begin making orders. Rather, produce goods immediately following the placement of an order according to a fixed quantity. Enterprises can also calculate and utilise EOQ (Economic Ordering Quantity) in order to minimize storage and order costs.
Technique #2: Immediate Shipment
Similar to the previous technique, don’t store goods at sales locations overly early. Instead, ship goods out from logistics centers straight to customers right after receiving their orders.
Technique #3: Centralized Transportation and Scheduled Delivery
Group goods that are being shipped to the same area/district together so they are delivered all in one shipment. Furthermore, coordinate with customers regarding an estimated delivery date before shipping. These two steps will allow for a larger volume of goods to be concentrated and transported, streamlining delivery and saving transportation costs.
Technique #4: Work Closely with Suppliers
Close communication and cooperation with suppliers allows for a better understanding of the quality and quantity of raw materials/goods being worked with. This can also enable a clearer approximation of the company budget, which will help with order planning for future customers.
Technique #5: Collaborate with Third-Party Logistics (3PL)
Allow goods to be delivered through third-party logistics. These professional logistics companies are able to integrate goods before systematically sending them out. Implementation of such centralized transportation systems can help companies cut down on lorry and manpower costs.
“Boxful Fulfillment” Offers Bespoke Logistical Management For You
When it comes to logistical management, Amazon’s performance is truly world-class. Fully utilizing the newest data and technology, customer orders can be fully completed within 30 minutes, from order processing, delivery plans to packaging – all operated by big data.
Although it is difficult to replicate Amazon’s system as the average SME, you can still take advantage of information technology and data to ensure high-quality, efficient logistics operations. The latest trend in this field has been to utilise a one-stop logistics management service, such as “Boxful Fulfillment”, which provides SMEs with tailor-made logistical services.
“Boxful Fulfillment” provides unique, flexible storage rentals with easy inventory adjustment according to off-peak and peak season demands. This ensures that you are only paying for the space you’re actually using. High-quality storage warehouses are readily equipped with all-weather temperature and humidity control, as well as fire and theft prevention measures. This allows you to store food, cosmetics or electronics with ease of mind, without fear of mold or quality deterioration,
Furthermore, you can make use of cloud inventory management to monitor inventory status, control scheduling and track delivery at any time. “Boxful Fulfillment” can also integrate supply chains, allowing your customers to place direct orders to access goods. All you need to do is give confirmation and let Boxful complete the shipment for you, streamlining your B2B operations.
Thorough logistical services such as these allow SMEs to cut down on a variety of costs, as well as significantly boost operational efficiency. Such reduced costs can be reflected in product prices, increasing market competitiveness and presence for your company.
If you’d like to find out more, please contact Boxful’s Logistics Specialist to tailor-construct a logistics plan for you.
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