Logistics forms the backbone of the Indian economy and enables the smooth and swift distribution of goods and services. Transportation is an integral part of the entire supply chain model and every industry player aims at having state-of-the-art transportation services at reduced costs.
Achieving this target might sound too hard but this can indeed be possible with a few modifications in strategies and streamlining of operations. Other possible solution could be to simply reduce logistics costs by streamlining inventory processes, providing better processes, enhancing distribution networks as well as improving relationships between suppliers and third parties.
Plausible transportation logistics costs reduction solutions
Reducing transportation logistics costs is indeed important yet difficult than ever before.
Have a glimpse at a few workable tips that will help you keep freight costs in check –
Logistics cost reduction
One of the pro-tips for industry players to save money is by working together with suppliers to reduce logistics transportation costs. There are instances when suppliers directly and readily cover some or a certain portion of the direct logistics costing which could be an effective cost reduction strategy for businesses!
Flexibility in transportation modes
One of the ideal cost-effective ways is altering your transportation systems and making them flexible and adaptable. The idea is not to stick to just one mode as doing so won’t be cost-saving!
Hence, look out for various modes of transportation and be open to switching from your traditional operations and incorporating new-age strategies. For instance shipping by sea over air or rail over trucking, adopting the intermodal transport method, or even combining any two modes could be some feasible options and could help save you time and finances.
Using warehousing services and digitizing then
If you have to ship various goods at a long distance, then storing products closer to your customers at warehouses could drastically reduce transportation costs. However, you need to ensure that it is safe and secure and is managed efficiently by a safety manager.
Another viable solution to decrease costing is by harnessing the power of technology in the warehouses. Using labor management as well as warehouse management software systems can lend a helping hand in achieving this objective of cost-cutting help. They help in managing the inventory and fulfillment capabilities and enable smooth handling of the warehouse activities.
Utilizing technology: automating logistics
When almost every sector is leveraging the potential of technology, then how can the logistics sector especially the transportation segment be far behind! Considering that logistics especially transportation is a labor-heavy market, one of the optimal ways for businesses to save money are by reducing their labor costs. Hence, including tech solutions and automating the container loading systems could prove to be cost efficient and could also reduce product damages.
Reports by a leading market research firm, Markets, and Markets point the trend that the global logistics automation market is expected to grow from $48.4 billion in 2020 to $88.9 billion by the end of 2026 at a CAGR of 10.6%. It also states that the APAC is one of the leading markets with India being the emerging market that would exhibit significant growth.
The study further highlights that the digital revolution in the logistics segment, robust expansion of transportation, emergence of IoT, surge in the e-commerce industry coupled with the rising number of logistics and warehousing companies is pushing the demand for automated solutions. This statistic depicts that automation of the logistics sector will pick up pace in the times ahead and will become an integral part of the supply chain model, especially in the transportation market.
Hence, digitizing the entire process by automation will be the future of the logistics and transportation market. It will enable you to track your shipments right from the stage when they leave your space to the point when they reach the doorstep of the customer. This can help you gauge the problematic areas in your transportation model and provide you real-time data about unexpected delays. This will also enable you to react quickly and cost-effectively modify your transportation strategies.
Providing optimized routes
One bad route opted by the driver could upturn your entire planning! Drivers apart from unbalanced work hours, spend a lot of time stuck in traffic rather than covering the required distance. This leads to high fuel costs and expenses. Hence, offering them optimized routes via the assistance of a route planner powered with route data and map technologies is important.
Furthermore, tracking the driver’s journey via tech solutions especially GPS can help monitor your vehicle's presence in real-time. This way you would be aware of the stoppages, the destinations, speed alerts, driver journey, etc.
New-age tools automating the entire process and planning the route, monitoring traffic and weather conditions in between, providing information about one-ways, avoidable zones, weight, and load capacity, etc. are indeed a boon for the logistics sector and play a pivotal role in the noteworthy reduction of transportation costs!
On the whole, streamlining the entire supply chain model and incorporating technology can help save transportation costs at significant levels. While it is tough to analyze issues in the logistics process, using tech-enabled solutions offering trip management services that help in end-to-end handling of trips with detailed dashboards also step in as a saving grace for the businesses that are keen to adopt cost-saving practices.
It is important for companies to understand and evaluate their costing and break it up as per the operational requirement. In such cases, labor cost usually occupies the highest share. Incentivizing programs for warehousing labor for instance can help in drastically reducing logistics transportation costs. Additionally, automating repetitive tasks not only ensures efficiency in operations but also helps save time and money! While the transportation logistics cost reduction target seemed impossible before; in the present times, due to technology, achieving this objective has become all the more easy and simple!
The author, Sumit Sharma, is Co-Founder at GoBolt. The views expressed are personal
First Published: IST