Logistics as a Sales Parameter

Getting goods from point A to point B should be simple. It is, IF you only have one shipment and send it by itself; however, that will rarely be cost competitive. To be cost competitive requires using transport forms which consolidate shipments and thus reduce the unit price. On top of this, the transport is an integrated part of the larger supply chain. Choosing the wrong transport form can become very costly.

Identify requirements

To optimise the logistics costs it is important to first gain a detailed understanding of the requirements.  What is ‘a must’? What is ‘nice to have’? And what interdependencies are there to the rest of the organisation?

This analysis will guide you to the preferred transport modes, relative to warehousing set up, as well as the structure of your optimal supplier. Do you require a standard product where clockwork precision is the key or are you looking for a more customised product where flexibility is the key?

How big a customer will you be with the supplier? Will you get sufficient focus in case of challenges? The larger logistics providers all have a segmentation of customers and what services are offered to each segment. If you are a small client you might be better off cooperating with a smaller supplier, who will give you more attention.

Corporate Social Responsibility

If your company has a green profile you also need to consider this in the supply chain. For example, airfreight emits up to 50 times the COper tons kilometer compared to seafreight.  (Source: www.TimeForChange.org)

Within a transport form there is also differences. Does your supplier operate new or old planes/ships? Both have undergone tremendous development in the last 5-10 years so the emissions have been reduced by a significant amount.

Internal Competencies

What competencies do you have internally to manage your shipments? Can you handle all documentation? Including customs clearance and the security declarations (to USA and EU)? What about managing your distribution warehouse efficiently? Even if you have the competencies, do you want to use your scarce resources on this or your core business? Seafreight rates have become increasingly volatile.  Do you want to continuously spend resources to ensure you have competitive rates?

The impact of choosing the right logistics provider

Basically everything within logistics can be outsourced. Successful outsourcing will require the right match in supplier and the right solution. If done correctly it can free your resources for your core business.

Outsourcing done correctly will put your supply chain in the hands of experts, who will improve the experience of your customers and thus help you to both reduce costs and increase sales.

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