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The 5 keys to reduce logistics costs

The applied technology aims to reduce costs in logistics and should have as its main objective to make the processes more efficient. However, it can also be a watershed in creating a Lean culture within the company.

In this sense, it is essential to look for a technology provider with the necessary infrastructure and the ability to offer solutions aligned with the competitiveness of the business.

According to the Logistics Costs and Service study, carried out by the consulting firm specialized in logistics Establish, in Mexico, the products’ cost can represent between 20 or 30% of the total cost of the merchandise in the country.

It can reach 50% in many cases, having the main inefficiencies in customs procedures and at intermodal points.

One of the most common mistakes of organizations in logistical terms is that they do not consider these operations a fundamental part of the business’s strategic decisions. They generally do not choose the market well and, worse still, do not develop efficient expense measurement indices.

Technology is believed to be a fundamental piece to optimize optimization processes in transportation and logistics.

For example, thanks to GPS, it is possible to have online visibility and traceability of the transport/packages and, therefore, obtain immediate information on the status of the items both in location and time, contributing to satisfaction and raising the level of customer service.

Five factors in reducing costs in logistics

In this context, five keys are identified that can help reduce logistics costs:

1. Formation of strategic alliances for the creation of clusters

The clusters enable transportation advantage when they send their goods to the same points, maximizing space and allowing companies to share expenses.

2. Traceability

As society evolves, the need for greater control of the volume of information is evident.

In the logistics field, the product’s information that indicates all the history through which it has been circulating is a demanded fact, both by legal aspects and by companies that wish to offer their customers added value.

In legal terms, the logistics of food and pharmaceutical products require that the consumer obtain information on these products taken to the line’s limit to avoid, for example, products in poor condition.

For its part, an added value is indicated when distribution companies offer their customers the possibility of knowing where their product is in real-time.

3. Mobile technologies

The benefits of adopting this type of technology that allow all the information that the operator needs, regardless of where it is located in the organization, are becoming more noticeable.

This allows you to improve your productivity and influence the reduction of operating costs.

In this sense, we can also talk about the power that voice picking technology gives the operator, which allows improving order processing times in distribution centers thanks to the fact that the preparer in most of the time, does not need a barcode reader to know how many products it has to “take” to fill an order.

Instructions come to you in the form of a “voice” through a headset, allowing you to operate hands-free and thus giving you greater freedom of movement.

Typically these solutions have an immediate impact on increasing productivity of between 15% and 30%.

4. Electronic commerce

The evolution of information technologies has allowed access to tools that have changed <content removed by moderator>  in some organizations.

This is the case of opening to electronic commerce or e-commerce since, in this way, a company can make itself known in a local and international market.

In the logistics field, many companies are dedicated to packaging and distribution that provide an added value of traceability of their products to customers through this methodology.

Besides, cost reduction is another benefit that both suppliers and companies can obtain through e-commerce.

On the one hand, the customer has access to a wider range of products, making it easier to compare prices in the market without leaving home.

With this, costs and prices are lowered since it increases providers’ ability to compete in an online market, which leads to increased competition and improves the quality and variety of products and services.

5. Use of advanced cost reduction techniques

Such is the case of Lean management. This focuses on reducing all the tasks that do not add value, thus eliminating waste.

In logistics management, it is important to adopt the Lean culture regarding the continuous improvement of jobs, the introduction of zero defect techniques, or the design of automatic subsystems.

Strategic vision to reduce logistics costs

After analyzing the previous trends, it is necessary to recognize the experience of the provider. The one capable of integrating networks, mobile devices, applications, and <content removed by moderator> according to each company’s adoption levels will be the most convenient.

Also, you must adopt all the integration to the strategies to increase productivity, profitability, and efficiency of any type of company.

It is not only about providing companies with solutions made up of advanced equipment, infrastructure, applications, and functionalities that allow uninterrupted and shared access to company information and streamline company processes.

The main thing is to provide robust tools capable of withstanding demanding work conditions, giving mobility to workers, allowing them to capture and share data in real-time in an agile and secure way, ensuring the flow of information within work zones.

1 Comment
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  • Dear Alisha,

    unfortunately you are using the wrong tag for your blog post. 'Software Logistics' is about the logistics of software, for example how to distribute applications in your server or cloud landscape.

    I would recommend to use a tag from the logistics application area like 'LE (Logistics execution)'. This will get your target audience to see it.

    Kind regards