Logistics cost reduction can feel like an uphill battle.
From sourcing to delivery, the number of factors involved can be overwhelming, and the pressure to cut costs never stops.
But there’s one area that often holds the key to big savings—and it’s easier to tackle than you might think.
Find out through the video below.
A Smart Approach to Reducing Logistics Costs
Many organizations are feeling the pressure of rising logistics costs. With tighter budgets, limited resources, and a slowdown in sales, logistics leaders are struggling to find ways to cut expenses. When faced with multiple areas to address, it’s easy to feel overwhelmed.
But there’s a simple way to begin cutting logistics costs without the complexity.
Navigating the Maze of Logistics Costs
Logistics costs can be overwhelming, with expenses spreading across procurement, transportation, warehousing, inventory, and customer deliveries. It’s easy to get caught up trying to solve everything at once. The key is to zero in on a single area that can drive meaningful savings.
One of the most effective places to start is by examining how you service your customers, specifically the size and frequency of their orders. Over the years, I’ve seen that focusing here yields significant results, often with little effort.
The Hidden Costs of Small Orders
Small orders are a hidden cost center. Most businesses have a mix of small, medium, and large orders, but the small ones are the real culprits when it comes to logistics inefficiency. They tend to cost more to process and deliver than larger orders, making them a prime area for cost reduction.
By reviewing your order patterns, you can identify where smaller orders are unnecessarily inflating your logistics costs. The goal is to find ways to consolidate these orders or reduce how often they need to be shipped. Even small changes here can lead to big savings.
Turning Customer Relationships into Cost Savings
It’s natural to assume that customers will resist changes to how they order, especially when it comes to order size or delivery frequency. However, many customers are open to change if it comes with a clear benefit to them. By offering discounts, free shipping, or other incentives for larger orders or fewer deliveries, you can encourage customers to adjust their behavior—leading to a win for both parties.
Taking Action on Cost Reduction
Wondering if your small orders are driving up your costs, try a quick self-assessment. A few simple questions will help you identify whether small, frequent orders are negatively impacting your logistics budget.
You can do your assessment here: Supply Chain Profit Leak Audit
Related articles on this topic have appeared throughout our website, check them out:
- How to Improve Warehouse Layout Efficiency and Save Costs
- Energy and Labour Costs: 2 Top Warehousing Challenges
- Cost to Serve Analysis—And the Costs of Neglecting It
- 12 Smart Ways to Reduce Your Freight Costs
