If your business is relatively new, managing its logistics division and supply chain can be an uphill battle. It is mainly because a correctly functioning logistics department has many expenditure components. Assigning funds and allocating them to each function can be very difficult. An established company has the advantage of having records of previous logistical expenses, and they can thus make an accurate assumption of their future costs. However, up and coming businesses do not have this luxury. You need to seek out service providers and carriers for each shipment and ask for shipping quotes from them all. By comparing instant freight quotes online, your budget reconciliation becomes much more comfortable. Here are eight ways you can make the most out of your logistics budget.
1. Negotiate A Long Term Base Freight Rate
If cargo transportation makes up a sizable chunk of your logistics budget, then it might be a good idea to negotiate a base freight rate that is valid for at least a year. That way, you can include these costs and decide on the correct sales price for your products.
2. Calculate Your Surcharges
One of the main reasons why logistics budget reconciliation is so hectic is because shipping rates and surcharges are prone to fluctuations. Changes in fuel prices and currency values can cause unforeseen volatility. Service providers generally fix the surcharges for a quarter. So you should be able to make an educated guess of the situation that would prevail in the next three quarters.
3. Domestic Shipping
Switching to a reliable Third-party Logistics (3PL) Provider for your domestic shipping can result in significant savings. Outsourcing your domestic shipping to 3PL providers can have loads of advantages for your firm.
4. Customs Brokerage
Apart from ocean freight rates, international shipping comes along with the added cost of the customs brokerage fee. You need to select a reliable and competent broker to manage the clearances of your international cargo.
5. IT Investments
Supply chain software is an indispensable part of most businesses today, and IT Investments make up a large chunk of the logistics budget. You should invest in reliable software and upgrade it regularly for it to perform at maximum efficiency.
6. Insurance
This is a minor cost when compared to the other components of the logistics budget, but it is essential to get insurance for your cargo. You can negotiate flat premium rates with your insurance providers and enjoy significant savings.
7. Warehousing
Freight warehousing is a crucial facet of logistical services. Improper warehouse management can result in increased expenses. Outsourcing this element to a 3PL provider can help you to cut down on costs.
8. In-House Staff
Most companies maintain in-house staff responsible for coordinating supply chain logistics. Staff salaries, benefits, etc. are essential elements of the logistics budget.
Proper staff management and outsourcing will allow you to manage your logistics budget efficiently.