Business logistics costs passed $1.6 trillion for 2018. One major contributor to inflated shipping costs is expedited shipping.
You can keep the costs down for your supply chain by evaluating the timing of your logistics process. While some expedited shipments can’t be avoided, the vast majority can be by making some simple changes.
Try implementing these six tips into your business logistics and watch your costs sink.
1. Plan Ahead
One of the easiest ways to avoid having to pay expedited shipping costs is to plan ahead. Look at your shipping times for previous shipments and use them to estimate your future shipping times. Use this to build out your timeline for future manufacturing or finished product delivery.
When looking at previous shipments, you need to factor in origin and destination and the time of the year. These factors can drastically change the shipping time required.
You should also note when truck inventory is in short supply. Sometimes transportation services become unavailable, such as a winter storm causing all trucks to stop. If this happens, your on-time shipment could become expedited.
You can plan for this by shipping your items even earlier. Or you could communicate with your customer to arrange for delayed shipment until after the shortage causing event is over.
If you don’t have historical data that you can analyze, call your carrier. They can give you an estimate for a shipment. Use the estimated shipping times to build out your supply chain, so you know when you need to plan shipments.
If your shipment is materials used in manufacturing planning will ensure your materials arrive on time and prevent production shutdowns. If your expedited shipments are for finished goods, you can correctly communicate with your customers so you can accurately set expectations.
How many shipments do you have in a day? In a week? In a month? There are 18.1 billion tons of goods moving through the nation’s transportation network. The carriers use automated systems to keep track of all of those goods.
You should consider automating your processes too. Embrace modern technology and innovation to organize and optimize your processes. This allows you to track supply and product volumes accurately by not depending on manual efforts.
It also allows you to know the status of everything instantly so you can make the right decision faster.
Automation could take manual efforts out of the equation entirely. You could program the system to order more materials or goods automatically when the in-house supply reaches a certain volume. Then your fulfillment order will already be on its way when inventory gets low.
3. Build Relationships
If you haven’t already done so, start building a solid relationship with your carriers. Show them that you’re willing to commit your shipments to them, and they’ll return that loyalty with favors and discounts.
If you have the odd expedited shipment and the carrier knows you’re a good customer, they may wave the expedited fees. This is a strong strategy to have if you’re a high volume shipper.
Your carrier representative may be able to provide suggestions to improve your logistics process. Don’t be afraid to use their experience and knowledge to improve your business.
4. Integrate Internal Processes
How many different programs and software do you use in your business? How many of them can communicate with each other to share information? If you’re using software that isn’t integrated, you’re doing your business a disservice.
Having your warehouse, shipping, customer orders, and accounting all integrated can help you identify trends. Looking at the data as a whole allows you to get an accurate view of your business and logistics process.
By integrating your systems, you can identify that a particular customer has a pattern to their ordering. You can then plan for these shipments to ensure you have enough supply for their orders.
You could see that order volume increases during a certain time of the year. This data from the customer orders can then let the warehouse know they need to order extra inventory in the weeks leading up to this order increase. Or the warehouse can let the manufacturing plant know they need more completed products earlier, thereby eliminating the last-minute rush.
5. Utilize Warehousing
If you find that most of your expedited shipments are on the customer side, then try changing how you warehouse your products. Having a warehouse to yourself is expensive, but some logistics services offer warehousing.
This reduces your warehousing costs by only paying for the space you need. It also reduces your shipping time by speeding up pick and pull and reducing transit times. To successfully implement this strategy, look at your order history and identify geographic regions where you have the highest amount of orders.
Then place satellite warehousing near these warehouses. This will reduce the transit time when a customer places an order. You can then pay for cheaper, slower shipping, and the item will reach the customer in the same amount of time.
6. Get Your Shipment Order Details Right
If you don’t provide the correct information when you book your shipment, it can become delayed. If this happens, you may need to pay for expedited shipping mid-shipment to get the cargo back on track. This is easy to avoid by weighing and measuring your packed shipment correctly.
Optimize Your Logistics Process
If you find your shipping costs rising, it could be from increasing expedited shipments. These rushed, last-minute shipments have the highest costs and are often avoidable.
Take a look at your logistics process and see where you can plan ahead, automate, and integrate. Then work on building stronger working relationships with your carrier.
Schedule your shipment today and avoid the expedited shipping costs.