When it comes to running a business, logistics is no joke. Back in 2017, companies spent nearly $1.5 trillion on logistics, up 6.2% from the year before and around $250 billion more than in 2008.
With this much at stake, one mistake could cost your business a lot of money. Avoid unnecessary costs by preparing and planning ahead.
The larger the operation, the more challenging it becomes, and the more things you need to check. Has the timeline been set? Will you need portable axle weighers? Who are the point persons?
Here are tips to help your company manage logistics and ensure that everything goes smoothly.
Prepare and Make a Solid Plan
What’s the difference between reactive and proactive? The answer is preparation. When you prepare, you solve problems more effectively as you will already have solutions to be implemented.
In the planning stage, there are three major aspects you need to factor in.
- What are your long-term goals? This should include customer satisfaction, company competitive advantage, and operation management.
- What are the means to achieve these long-term goals while still delivering value and customer service?
- How will your company execute the logistics strategy?
It is also important to note that a logistics strategy plan usually covers three to five years. This plan should cover the following elements.
- An overview of how the logistics plan affects other aspects of the company
- A strategy description that supports the overall plan, including inventory and warehousing, order processing and fulfillment, transportation, and customer service
- Breakdown each logistics and operations, inclusive of their timing, costs, and impact
- Forecasts of requirements of the workforce, capital, and other necessary assets
- A financial statement that describes capital requirements, operating costs, and cash flow in detail for executives and stakeholders to see the big financial picture
Make Sure a Reliable Team is in Charge
For a successful operation, you need the assistance of reliable professionals. If your company has an internal logistics department, appoint someone who:
They need to have the ability to anticipate needs, outcomes and even have contingency plans
Has strong management and organization skills
They need to have a keen attention to detail and be vigilant in follow-up parties. Nothing should get past them to ensure the success of the logistics strategy.
Is a team player
Since logistics is a group effort, whoever you appoint needs to be a team player. They need to know how to lead a team effectively, delegate properly, and acknowledge a job well done.
Has good interpersonal communication
A logistics manager will be coordinating with different people as well, so they need to have good interpersonal communication.
If they’re good, they’ll also have a solid network of industry contacts, making them well-equipped if your logistics plan goes south.
You can outsource logistics services, regardless of the size of your company. But how do you know when it might be time to look for a third-party logistics provider?
- When the overall structure and/or strategy of your company is changing
- When your service levels are failing and logistics costs are rising
- When your company is experiencing rapid growth and need to scale urgently
- When you’re entering a new market, whether it’s geography or business type
- When you’re struggling to recruit and retain quality logistics talent
However, you need to be very careful in choosing a logistics provider. Things can turn into a disaster with the wrong one.
When looking for a third-party logistics company, make sure that both parties are on the same page.
Asking the right questions is a big factor in having a successful working relationship. Define your expectations, timeline, and what you want to achieve.
Look for a company that best aligns with your goals. Make sure to evaluate their services, strengths, and weaknesses. (Take note that providers have different expertise in market segments, geographies, and industry verticals.)
So how do you choose a third-party logistics company? You need to take into account the following:
- The industries they serve
- Their specialization and certifications
- Past and present client reviews
- Consistent improvement initiatives and participation
Learn From Your Mistakes
Poor logistics management can lead to costly consequences in terms of time, money, and more. To improve your logistics strategy, regularly sit down with your team. Openly and objectively discuss mistakes made in the past and how you can remedy this moving forward.
Next time you are in a logistics planning session, keep these tips in mind to maximize the efficiency of your strategy, potentially saving you from unnecessary costs, stress, and wasted time.