Lower Logistics Costs, Uncompromised Customer Service: Make it Happen


LogisticsReduced costs and improved customer service are always top priorities for any business. For the logistics industry, however, these two probably are the most important, as these provide the most returns for investment.

The problem here, though, is that these priorities are often the most difficult to achieve. Transportation prices are always on the rise, making it challenging to keep shipping rates low for customers. Nevertheless, there are strategies you can use to make these two priorities a reality for your business. Logistics solutions providers recommend following these tactics to effectively cut down costs without compromising the quality of your customer service.

Minimize Cost-to-Serve

Know the true costs of each business operation, from transportation and production to customer service and raw materials. Once you’ve determined the expenses involved, look for opportunities where you can merge orders and switch to lower-cost transportation modes.

Improve Network Design

Use network modeling software and other analytical tools to create an efficient supply chain. This will bring costs down, as it eliminates unnecessary resources, facilities, suppliers, and procedures. More importantly, it ensures an optimal network that delivers efficient services for clients.

Evaluate Performance

You can’t manage what you can’t measure. Establish performance metrics so you can regularly evaluate your operations and see opportunities for improvement.

One factor that matters the most with respect to cutting down costs and improving customer service is transit time. How long does the shipment take to arrive at your customers’ location? Unless your processes are integrated into the customers’ systems, you may have to depend on the freight carrier’s report.

Determining transit time and other metrics is crucial to reviewing your performance and optimizing your logistics and supply chain operations.

Watch out for Hidden Expenses

Hidden costs aren’t just budget roadblocks; they also affect the efficiency of operations. For instance, one common hidden cost comes from under capacity. Running short on vehicles affect your response time—putting a strain on customer service and making you go for Band-Aid solutions like renting temporary couriers. The best way to keep these hidden costs at bay is to work with professionals in auditing expenses.

Minimizing costs without compromising customer service is possible. Follow these tactics to make this a reality in your business.