The supply chain manager has a number of important tasks to handle in order to ensure a steady and reliable supply chain. We already mentioned them in our previous article, but this time, let’s focus on the fourth step of that supply chain management process – deliver, or perhaps better known as logistics, why is it so important and also to give you some best logistics practices that should help you better manage this step and reduce spend.
Why Logistics Plays a Key Role in the Supply Chain?
It won’t matter if all the other processes, including planning, sourcing suppliers, procurement, execution and so on are perfectly done. If you don’t have raw materials, if you are unable to obtain them, if they are late, the whole supply chain can break and the cost the final customer will have to pay will increase dramatically.
It would be nice and much easier if materials needed for production could appear out of thin air, or if you could somehow teleport your final product to the final consumer, but that just ain’t happening.
And this is where logistics comes in. How your company handles this process will, in large part, determine the final cost of the product the customer has to pay.
Here are some best practices you need to follow when it comes to logistics:
1. Make Demand Predictable for Carriers by Consolidating Your Shippments
One thing that carriers and suppliers really don’t like is when a buyer asks for new shipments, but on tighter schedules. And, when at the same time, the buyer asks for lower costs, you can hear the grumbling.
So what can you do? Make demands for shipments more predictable by consolidating them. That way, carriers can place their shipments on “fast lanes”, save money themselves, reduce shipment times and everybody is happy.
2. Outsource Logistics
Logistics requires having a fleet of vehicles, be that trucks, ships or something else, but it doesn’t end there. It can be a very complicated process, that is best left to a 3rd party carrier that is well-versed in this sort of business than trying to do it yourself. Believe us, you won’t be saving any money by running your own logistics.
3. Give Carriers More Lead Time
Giving carriers extra lead time can mean the world to them. If you could increase their lead time to 72 hours, that will help them better anticipate and manage freight movement. In the end, a simple act of providing information about the next shipment to the carrier, will result in lower costs for your company and for the customer as well.
4. Use Cloud-Based and Big Data Analytics Whenever and Wherever You Can
Both cloud and big data can pay dividends in logistics. Cloud-based analytics can help you faster adapt and respond to changes, while big data analytics can guarantee real-time management of not just logistics, but the supply chain as a whole.
5. Keep an Eye on the Nature and its Fury
Nature is one factor you need to account for, as it can quickly surprise you. Natural disasters happen and they can affect your shipments. While you can’t fight nature, not if it’s really determined, you can minimize the risks by diversifying carriers and using alternative shipping routes. This way, you can make sure, sunny, rain or snow, the materials will get to you.
6. Plan for Both Cyber-Threats and Terorism
It’s unfortunate, but we don’t live in a 100% safe world. Both cyber-threats, such as malware, spyware or hackers and terrorists can derail your supply chain, especially logistics. Don’t leave anything to chance and ensure that you are actively working on reducing these risks by employing good cyber security and following counter-terrorism laws, as per the Customs-Trade Partnership Against Terrorism.
Procurement and logistics often go hand-in-hand and together are key parts of the supply chain. By following these 6 best logistics practices, you can ensure faster shipments and lower costs as a result.
Do you know any other logistics best practices? Share them with us in the comments below and don’t forget to subscribe your email to receive early access and updates to Purchase Order Plus.