Those two points, wherever they are, can definitely make or break a business. The margin there, though, leans heavily toward the latter when most of your budget goes to the cumbersome shipping and receiving logistics department!
It’s not your fault, though. Honestly, this aspect of business can be tough to deal with. You’ve got to figure out all the methods, carriers and policies from a legal standpoint, and even then you have to work the budget to ensure you’re getting some kind of ROI back. It’s a matter of fact — it’s costly to transport merchandise from point A to point B, no way around it.
There are, however, some ways to maximize your savings, increase your profits and ensure costs stay minimal. Logistics experts and shipping consultants here have you covered, starting with….
Focusing on the Location
This should be a no-brainer, but it’s amazing how many businesses don’t even consider the fact that being near an airport can save tons of money. Consider the location of your central hub. If it’s located near major businesses, you’ll even get additional business, which is good for your bottom line, plus you can easily charge a lower base rate given your expenses will automatically go down just for being so close to those companies.
Maximize that efficacy, too. Have hubs stationed all across the country. That saves time. That saves petrol. That saves manpower. It might be an incredible cost to man all those hubs concurrently, but in the end the constant droves of revolving accounts paying up per month on retainer for you to transport materials will balance it all out.
Know Your Cargo
No one ever thinks about what the cargo is, only what the price is. They never consider the fact that the cargo often can determine the price. How big are the boxes? How much are we talking about in terms of quantity? That can directly correlate with the decision to go with ground shipping direct vs. airmail.
Forecasting plays a big role here. If you know what you’re going to be shipping, you can then consider just how you’re going to ship it. It’s not enough to just compare the prices. Sometimes different carriers will vary in terms of the packaging and quantity; therefore, what might be cheaper for a certain shipment will be actually more expensive, all because of what you’re shipping! Do it right, and you actually might be able to get away with offering “free shipping” for your customers solely on the fact that you predicted all the factors beforehand.
While We’re on the Subject of Modes of Transportation….
How you conduct your logistics is important, too. Some ways are more expensive than others, albeit sometimes necessary depending on the type of shipments you have. In other words, if you can go with traditional ground shipping, go for it. Larger shipments, though, will have to go by freight or air, but even boats can be a possibility.
There are trade-offs, though — generally speaking, ground shipping is more inexpensive, however you get a longer lead-time, which some customers don’t like. While airmail, though, can get product from point A to point B a lot faster, it can also reach destinations not applicable to ground transportation. Consider your locations, your clients — where your addresses are might determine just what mode of logistics with which you choose to operate.
Keep in mind that the cheapest way to go may not be the best. This is especially true if you have merchandise that’s easily breakable. Knowing fragility can slow down logistics tremendously, which can tack on countless expenses beyond what you’ve saved. It is what it is, but at least you know what it is enough to invest in the money based on the analysis.
Above All Else, Make Sure You Do Your Homework
Before you get business going, the paperwork is essential. I know — it’s a headache, and no one wants to deal with documents. As a business, though, document preparation is a must, so bite your bottom lip and grit your teeth while doing it, because in the long run your logistics will benefit tremendously.
Handle all your postage, permits and visas in house before getting the business going, plain and simple. It optimizes your efficiency, too, standardizing postage in bulk, so you don’t have to worry about making sure all your packages are correctly stamped. The longer you take to handle all of that on your own right then and there, the more costs will skyrocket. You can potentially save up to 20% just in one year from preparing all of this ahead of time.
Honestly, you want to manage all the paperwork right off the bat? Go with a company providing you with the exceptional shipping software options and cloud services allowing you track all of your operations. Pitney Bowes can be an excellent pick, organizing all of your data and making it really easy to keep a close eye on the distribution and logistics network.
Situations and Systems Are All Unique….
Bear in mind, with these tips, that not all businesses are created equal. Consult with your business lawyer about what you might need to focus on. Without a doubt, location is important, but oftentimes the location may not matter depending on your clientele and product. Moreover, your cargo might not be such a variable, which in that case you don’t have to constantly forecast anything. As for transportation and paperwork, you might be so local — as well as your clients being local — that it’s a minor detail easily handled by one employee with minimal cost and time management.
Overall, this will guide you to take a good look at your entire system and determine what your needs are. Point A and point B are important points. Draw the line and make sure they’re connected successfully. How those lines are drawn? That one’s up to you.
Matt Faustman is the CEO at UpCounsel. You can follow his business insights on Twitter at @upcounsel.