Lowering Logistics Costs
From Jeff Ashcroft,Your Guide to Logistics / Supply Chain.
Expense saving strategies for the logistician
For those firms who have yet to wring all possible benefits from their supply chain, significant low hanging benefit opportunities may be waiting in the Logistics area.
This is especially true in the growing number of firms where other companies have been merged or acquired resulting in potential synergy benefit opportunities. And as more firms explore and then exploit this area, other firms who do not will find themselves at a distinct competitive disadvantage.
Steps to Lower Logistics Costs
These steps provide a rough outline of the steps to take when lowering logistics costs.
1. Identify the customer service targets and business goals. This is a collaborative effort including all stakeholders within the organization and key customers, carried out on a participative basis to ensure consensus and buy-in on the results.
2. Calculate current logistics costs. While accurately identifying logistics costs may sound like a simple task, doing so by incorporating all business costs impacted by logistics functions, taking into account all support costs and transfer credits can often be a more difficult task than any imagine before when they undertake such a forensic calculation.
3. Benchmark costs against the best companies in similar business and industry areas.
4. Develop, plan and implement the lowest cost supply chain methodology capable of meeting these core business needs.
An Alternative Approach
Another approach to driving costs down is to use Activity-Based Costing (ABC) methodologies and tools such as CAST dpm which assist in the benchmarking and cost calibration process, followed by the creation and validation of lower cost logistics strategies to meet the service goals of the organization.
Such approaches can even be taken to the individual task and volume level to ensure that your firm is meeting specific metrics for warehouse operating tasks. The use of such a task comparison method can assist firms in targeting specific cost reduction opportunities in the logistics function to even further reduce overall logistics costs.
In fact, low cost tools built upon these metrics are now available from firms like Vision Logistics which offers a Benchmark Resource and Budget Planning Model in support of such projects.
Expense saving strategies for the logistician
For those firms who have yet to wring all possible benefits from their supply chain, significant low hanging benefit opportunities may be waiting in the Logistics area.
This is especially true in the growing number of firms where other companies have been merged or acquired resulting in potential synergy benefit opportunities. And as more firms explore and then exploit this area, other firms who do not will find themselves at a distinct competitive disadvantage.
Steps to Lower Logistics Costs
These steps provide a rough outline of the steps to take when lowering logistics costs.
1. Identify the customer service targets and business goals. This is a collaborative effort including all stakeholders within the organization and key customers, carried out on a participative basis to ensure consensus and buy-in on the results.
2. Calculate current logistics costs. While accurately identifying logistics costs may sound like a simple task, doing so by incorporating all business costs impacted by logistics functions, taking into account all support costs and transfer credits can often be a more difficult task than any imagine before when they undertake such a forensic calculation.
3. Benchmark costs against the best companies in similar business and industry areas.
4. Develop, plan and implement the lowest cost supply chain methodology capable of meeting these core business needs.
An Alternative Approach
Another approach to driving costs down is to use Activity-Based Costing (ABC) methodologies and tools such as CAST dpm which assist in the benchmarking and cost calibration process, followed by the creation and validation of lower cost logistics strategies to meet the service goals of the organization.
Such approaches can even be taken to the individual task and volume level to ensure that your firm is meeting specific metrics for warehouse operating tasks. The use of such a task comparison method can assist firms in targeting specific cost reduction opportunities in the logistics function to even further reduce overall logistics costs.
In fact, low cost tools built upon these metrics are now available from firms like Vision Logistics which offers a Benchmark Resource and Budget Planning Model in support of such projects.
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