Tips To Reducing Logistics Costs In Consumer Goods Distribution

For businesses, there’s no avoiding logistics costs. They come with the territory and can comprise a significant portion of overhead costs. To reach a bigger market, many companies rely on multiple distribution centers. The management of these centralized hubs can be costly and complicate decision-making when trying to further optimize their business. Investing in a solid distribution channel should be a no-brainer. It all starts by getting the basics right. You can click here for packaging and distributing if you’re still having challenges with that aspect of the business. Here are tips that can help reduce logistics costs in consumer goods distribution.

Narrow Down

Narrowing down your product-market offering is one of the most effective ways to keep costs down in any industry. There’s no point in selling an overabundant supply of products unless they’re necessary to your customers. Draw up a shortlist of necessary products and start cutting down the extra ones.

This may not be an option for some companies, but if your company is big enough (and you’re willing to pay the price), hiring consultants can help you figure out ways to cut costs. They’ll be able to see areas where your company could be more efficient that you might not have thought about before.

However, you have to be careful when it comes to modeling your business after other companies. Take McDonald’s, for example. They have one of the most efficient logistics strategies in the food delivery industry, but that doesn’t mean you should try and emulate them completely. You’ll need to take into account your own strengths and weaknesses when figuring out how each tip will impact the success of your business in detail.

Improved Communication

No matter what kind of company it is, it’s going to have to deal with the same basic issues. Whether you have a call center or an actual office, you’ll have to deal with customers facing several problems. One of the biggest challenges is understanding how your product will be received and adapting to complaints and customer feedback. You can work with your company’s suppliers to see what needs to be changed regarding the product they produce and make sure they deal with any problems regarding customer service so that you’re not left with an unpleasant situation at the end of the day.

Something that a lot of companies experience is delays and miscommunication on their part. This can have a huge impact on the business as a whole. The more you can do to be able to pinpoint what’s going on and keep track of issues that arise, the less strain your company will have on the bottom line. This will allow you to figure out areas where you can cut costs and still have a safe and reliable supply of goods.

Find Proximity

One of the biggest things that can reduce costs is finding a good location that’s close enough to your competitors but far enough from them that it won’t put you at a disadvantage. This will allow you to kick things off with a significant advantage and give you a leg up on the competition before they even know what hit them. If possible, choose a location with strong infrastructure to avoid having to worry about your business being bogged down.

However, it’s worth keeping in mind that location alone won’t be enough. You’ll also need to look for a good transportation provider to facilitate the delivery of your goods.

Work With Other Shippers

While the idea of a warehouse is a bit intimidating, you don’t have to have all of your goods coming from there. You can find more efficient ways of distributing your goods if you collaborate with other companies that have similar goals to yours. In this way, you can pool resources and benefit from each other’s services without spending too much on administration costs. This will allow you to focus on the most important aspects of the business and cut down on some of the expenses of running a company.

Increase Order Volumes

The more you order, the less it’s going to cost you. You can both lower your overhead costs, as well as get more of a discount on your goods. It’s worth keeping in mind that you shouldn’t try and buy everything at once if you can help it. This will be much too expensive and will just cost you extra money that could have been spent elsewhere. 

Companies that regularly ship across the country or into Canada should always look for ways to increase their volumetric efficiency. That means your trucks simply need to be carrying more stuff per ton, ton-mile, per gallon of fuel, etc. The best way to do this is to put a real focus on getting actual density data for your truck fleets, so you can really see what you’re packing in those trucks and why they’re not completely packed.

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