Manage Logistics

How to Manage Logistics for Maximum Profitability

Logistics is a relatively large expenditure for most companies, and it’s an important component in customer satisfaction company-wide. In fact, in 2018, the cost of logistics made up 8% of our country’s GDP according to the Council of Supply Chain Management Professionals sponsored 2019 State of Logistics Report. Being such a substantial segment of many businesses, it’s a great place to save money and improve profitability, but how? Here are some ideas.

Agility is Key
Today’s consumer demand means that logistics management must have the ability to collect accurate data, analyze it, and then make decisions based upon it in fairly rapid succession. Thinking on your feet is critical to effectively manage logistics within the fast-paced environment in supply chains today.

This agility is the difference between over and under ordering, over and under stocking, and late or missed deliveries, all of which may result in the loss of business.

Efficiency Equals Savings
One of the best ways to increase profits through better logistics management is to improve efficiency. Here are some ideas to make your operations more efficient and therefore less costly and more effective at providing a great customer experience.

Manage Information Effectively
Whether this means using a custom or bone stock information management system or finding another way handle the dissemination of information across your organization, departments and stakeholders must be able to effectively communicate what’s going on within the company.

Build an Effective Workforce
Across most logistics outfits, freight doesn’t move itself. You’ve got to train an effective workforce in efficient methods in order to get the most done in the least amount of time. Part of this is keeping up morale, which means that management must do everything within their power to keep staff happy and willing to give it their all.

Keep Enough Stock on Hand
It’s hard to make money when you don’t have product to move. If you don’t have the warehouse space to keep enough stock on hand and you can’t get more, a 3PL provider might be an ideal solution to make sure that understocking isn’t cutting into potential profits or damaging customer relationships.

Always Be Prepared
This motto, popularized by the Boy Scouts, absolutely holds true when you’re working to manage logistics. Murphy’s Law also comes to mind. If whatever can go wrong does, logistics management must mitigate the damage done. Being prepared for things to go wrong rather than counting on the best-case scenario is a great way to keep setbacks from impacting operations and, in the end, profitability.

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Independent research shows that improved supply chain management can yield:

  • 25 – 50% reduction in total supply chain costs
  • 25 – 60% reduction in inventory holding
  • 25 – 80% increase in forecast accuracy
  • 30 – 50% improvement in order-fulfillment cycle time
  • 20% increase in after-tax free cash flows
  • Supply Chain Mapping

  • Review Market Conditions

  • Determine Operational Inefficiencies

  • Outline Opportunities

  • Implement Changes

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