How to improve efficiency in the logistics department of your company

These are the 5 ways to increase efficiency in logistics

To improve the efficiency in the logistics of my company here you will find some points that should be taken into account when ensuring efficiency in logistics projects, for this we will highlight some specific elements that will serve as a starting point to select, create or design an efficient logistics strategy.

Before going directly into our main topic, it is important to understand that logistics is responsible for leading all the processes necessary for a product to get from the manufacturer to the final consumer, this is an operation that must be done carefully and accurately.

In order for manufacturers to develop a high competitiveness in the market, it must have an outstanding management of its supply chain, taking into account points such as transportation, shipments, inventories and also the inconveniences and unforeseen events that may arise in the process.

It is very common to see that many entrepreneurs or businessmen do not give the importance that the logistics issue deserves in the planning of their strategies, however, as soon as their business project is underway, the look changes and an opportunity for improvement is identified to generate effectiveness in the company and create optimal logistics channels for the organization and customers of these brands.

In fact, thinking about the logistics strategy for the productivity of companies, can account for up to a third of the total cost of an entity, so the calculation can be fatal if this aspect is not estimated in the budget of the company, taking into account this point, it is very likely that the organization not only will not find its break-even point, but will face problems to be competitive in today's market.

Remember that the goal is to improve the efficiency in the logistics of my company and that you can find companies that go with your same business philosophy, that you can connect with proactive companies and that your organization will always grow based on assertive decisions and strategies.

1. Implementation of new technologies in the supply chain.

To improve the efficiency in the logistics of my company, technology is an important factor since it is part of our daily life, it brings us closer to a futuristic life and facilitates processes in different fields of life, the logistics sector is no stranger to these advances and tools provided by the digital environment, as there are a variety of programs and software to keep track of processes, there are for all kinds of specific needs, such as integrated management systems, assistants to order processing in the distribution of products, warehouse management system, transportation management, among others. The latter is used in collaborative relationships with transporters, suppliers and customers.

These are some basic existing systems that are normally used frequently and give good results in the regulation and analysis of logistics processes in each of its stages within a company:
  • ERP: Integrated Enterprise Resource Management System.
  • TMS: Transportation Management System. It is used in collaborative relationships with transporters, suppliers and customers.
  • CGA: Warehouse Management System.
  • WMS: Demand forecasting systems
2. Improve inventory management efficiency

The main purpose of this point is to ensure the availability of materials and products to meet demand. The key here is to determine the most efficient processes to effectively manage and store products.

To achieve this, we will give some useful recommendations to consider:
  • Use coding practices to detect materials and products, this enables you to standardize and is fundamental to quality processes.
  • Use categorization practices (for example, ABC to classify materials according to their importance, it can also be done by dates or numbers depending on each case and specific need).
  • Manage stocks in a synchronized way for inventory updating.
  • Implement just-in-time policy to sustain inventories in good scenarios and reduce lodging expenses.
  • Leverage the postponement strategy, which facilitates postponing product customization altogether, to better respond to demand.
  • Invite suppliers to manage inventories. This is called Vendor Managed Inventory (VMI) or "Vendor Managed Inventory" and the purpose is to facilitate the traceability of goods from the time they are shipped until they reach the end customer.
3. Inventory Warehouse Management and Tracking

In some companies, warehouse management can account for up to 50% of a product's costs. Studying the flow of warehouses and being able to manage it is key to competitiveness.

We will give you some ideas on how to carry out such management from an objective and efficient structure for the benefit of your company:
  • Use automatic picking systems that increase the efficiency of elements related to warehouse management.
  • Strategically plan the supply network. Find the most economical way to receive and ship product while maintaining quality and customer service.
  • Use shared warehouses. It is advisable for small and medium-sized companies with dynamic geography, since it makes it easier for them to be flexible.
  • Have buffer warehouses available. They accept a more dynamic organization and affirm a light response.
4. Follow up on transport modalities

Normally, this area represents high costs in organizations, so you should focus on efficiently managing this item, as it is essential for cost competitiveness and allows you to identify the dreaded "hidden" costs:
  • Traceability of the cold chain. This point is key in the food chain and even some medicines, as it deals with temperature control throughout the transport process.
  • Traceability and security throughout the supply chain. This will help you understand the history, location and trajectory of a product for stock control, production and synchronization with distributors.
  • Use of Crossdocking. It has virtues such as daily deliveries to stores, chain control, delivery accuracy and transportation savings.
  • Use of multimodal transport. It is effective for the transportation of materials and products, in addition, it enables transportation around the world.
  • Implementation of consolidated cargo. It is used in rail transport and routes, by means of a load for numerous companies. It is used to reduce rates and limit customer commitment.
  • Outsourcing. The outsourcing of this development facilitates cost reduction and the implementation of the famous reverse logistics. Which are all the processes and occupations to manage the return and recycling.
5. Outsourcing logistics services companies

In this last point, to improve efficiency in the logistics of my company we will talk about the strategy that seeks to group different companies in the same sector, to form alliances and work for mutual interests or goals, this idea has shown positive results, it is now very common to see coalitions that basically seek to grow together, ie not seen as competition but as an opportunity for strategic alliance against its market, a strategy that has worked quite well and continues to move masses in its structural sense.

We will give you some tips to improve your external relationship and enhance your strategies:
  • Assign personnel to manage the relationship with suppliers.
  • Deliver timely replenishment to suppliers in relation to their development.
  • Measure the customer's perception of the supplier.
  • Establish long-term contracts that benefit both parties.
  • Facilitate reciprocal cooperation.
  • Have regular meetings to understand their expectations and concerns.
  • Share long-term business projects.