The Best Ways To Save Money in Logistics

With current supply chain issues, it’s no surprise that 3PL companies need to adjust their strategies to deliver necessary goods on time. To remain profitable, you may need to make some changes. Here are some of the best ways to save money in logistics. Whether in warehousing, shipping and freight, or client retention, these strategies will help reduce costs at every corner.

Keep Track of Every Aspect of 3PL

3PL refers to third-party logistics companies. Ultimately, as part of the supply chain, this has great importance to the foundation of goods and services and their transport from manufacturing to delivery. Keep in mind each stage of logistics that these products go through: warehousing, inventory management, transport, and order fulfillment. With that in mind, you should learn some useful strategies to help reduce expensive overhead costs in each sector. For example, consider a warehouse management system to better track employees and inventory. You should also look into fleet repair and driver experience to further reduce issues with transport. Each of these stages in 3PL has its own respective costs, so don’t neglect these when looking into cost-saving measures.

Don’t Neglect Contract Negotiation

Of course, don’t neglect contract negotiations. Contracts are fundamental to the success of your 3PL company. Bargaining power may be your best tool here. Don’t be afraid to negotiate the price with your client to ensure you’re both on the same page for the services involved. With each part of logistics accounted for—warehousing, transportation, inventory—you can negotiate a set price for these services to see a higher profit margin. Ensure each delivery vehicle and warehouse has the appropriate management software to account for everything.

Understand Driver Detention

One of the best ways to save money in logistics is to address driver detention. Basically, driver detention occurs when a driver’s route gets delayed for longer than the agreed-upon time. Commonly, this is two to four hours after the agreed delivery time. Drivers are responsible for delivering cargo within this timespan and should receive confirmation that the client received the order on time. If a holdup causes them to wait longer than two to four hours to pick up or drop off their goods, this can negatively affect your entire logistics chain’s timeliness. Keep this in mind to save money at your 3PL company. Each time a driver fails to deliver in the respected time, you face detention fees and risk client relations. Fortunately, you can avoid this issue with some common tips, such as improving cargo management, ensuring loaders are ready to go, and holding drivers accountable for arriving on time.