Increasing Profits in Logistics and Supply Chain: Important Tips to Reduce Operational Cost

Most business leaders will agree that the best way to gain profits is by reducing operational costs, especially in logistics and supply chain industry. Keeping logistics costs under control is often top priority to improve company bottom line. While the explosion of activities in the ecommerce retail sector is an advantage for warehousing companies, you need to improve supply chain processes in order to save business money and boost profits.

Poor logistics and supply chain planning and management could result in excessive costs, missed delivery deadlines, and even damaged goods. No wonder, efficiency is the key to reduce operational costs. However, to achieve that purpose, first you have to know where to look because focusing on the right areas will lead to the expected results. You need to ensure that reducing costs or streamlining certain roles will not lead to increasing costs in the other parts, as everything should be well-balanced.

Consider the following practices when you plan to conduct operational cost cutting:

Investment in safety

As logistics and supply chain jobs often deal with heavy workload with high risk of accidental injury at work, employee’s safety should be number one priority. For example, when an accident occurs during a delivery, not only does the company have to pay for the health insurance for the involved employees, but also spend more to hire temporary replacement workers and compensate for the missed delivery schedule to the clients. Therefore, you should invest in safety to keep the costs under control by creating safe and hazard-free working environment. You also need to conduct regular equipment maintenance to check if everything works perfectly and prevent unwanted mishaps.

Labour force management

Employers will agree that the biggest business spending goes to pay the workforce’s salary. Therefore, you should make sure that employee’s productivity and business revenue is on the balance level with the amount of money you have paid. Check in with your employees to observe if their performance aligns with the productivity level. You should also analyse the employee turnover as it costs a lot of money.

Technology and automation

In today’s era of digital transformation, you can rely on automation technology to save operational costs. You can ask for help from professional to observe if there is an area you can automate, so you can make the operations more efficient. For example, autonomous robots are now highly used in warehouse. Using automated technology is not only a great cost-saving strategy, but also maintain quality and productivity.

Resources optimisation

Managing your warehouse in the right layout and optimising the use of your facilities will directly affect your business revenue. For example, you can start by re-arranging your warehouse in a particular layout so it can keep more goods and packages. This way, you do not have to spend more money for renting additional warehouse during peak season. This strategy will also help you to anticipate pending shipment as well-arranged warehouse will help making the loading and unloading packages faster and easier.

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