How to Reduce Supply Chain Transport Costs

Building a successful business means constantly fighting costs while providing the best product for your customer. Optimizing supply chain transport costs is a way to keep your business competitive. Reducing supply chain costs begins when your inputs are loaded onto the truck and ends when your product is delivered to your customers. To reduce supply chain transportation costs, you should closely examine your transit and warehousing practices.

Use Every Inch

Space is one of the most valuable commodities in your supply chain. How much space your products take up in transit and storage determine your transportation logistics costs. Because you are paying for that space, ensure you are using every inch to its fullest potential.

Modes of Transportation

Buying space for your inputs or products on an airplane is more expensive than buying space for other modes of transportation. However, because shipping by air is fast, it might be necessary for some circumstances. Whether or not you currently use air, road, sea, or rail transportation, it is worth exploring other options, if only to see the potential costs. Depending on your needs, it may be most cost-effective to ship some products via one mode and others in a different mode. If a product or input can come slower without damaging your business, you can save money and reduce supply chain transportation costs by purchasing space on a slower transit method.

Trailer Load

If you currently ship products over the road, you need to know how much of the truck each shipment uses. Understanding the difference between less-than-truckload (LTL) and full-truckload (FTL) rates can help your costs stay low. Instead of paying for empty space in a trailer, look into LTL loads. This way, you can split the cost with other customers so that everyone can reduce their supply chain transportation costs. However, if you have enough product to fill up a truck, it is better to pursue FTL rates.

Warehouse Space

Harnessing all the space you have paid for as efficiently as possible should also be a priority. In both transit and storage, using vertical space is a way to do this. Because every product is unique, it can take time to figure out an effective way to stack them and use unused vertical space. However, good-quality pallets offer a reliable way to standardize your goods. If standard pallets cannot meet your needs, custom pallets can help make the best use of the warehouse space you are already paying for. Beyond making the best use of space, pallets make loading and unloading much easier.

Lighter Pallets

Because most means of transportation build cost calculations around weight, an easy way to reduce transportation costs is to minimize weight. While pallets are necessary, they do add weight. However, kiln-dried pallets mean that you are paying to ship less water. Excess water evaporates as the wood is heated, making the pallets lighter. Think about how many pallets you ship per year, and you can begin to visualize the savings.

Favorable Contracts

Applying leverage to a few carriers is another way to reduce supply chain transportation costs for your company. While getting the lowest price for every single load from a wide range of carriers may seem cost-effective in the short term, it might not be as beneficial as negotiating contracts with favorable pricing. This strategy also means that your company will have working relationships with a few carrier companies instead of starting from scratch with every shipment.

Time is Money

Saving your employees' time leads to increased supply chain transportation savings. The best ways to do this are to automate systems wherever possible. That can mean automated warehouse management systems or mechanization with automatic container unloading systems. Automated stacking can also lead to less loss due to human error.

Conclusion

Because every operation is unique, there is no magic formula to reduce supply chain transportation costs while maximizing customer satisfaction. A few best-practice strategies to reduce spending in this sector include eliminating waste wherever possible. Wasted space, wasted weight, and wasted time are all expenses you should not be paying for. Although every business and product lineup is different, one sure way to minimize supply chain costs is to use the correct pallets for the job. To find the best pallet manufacturers in California for your company's needs, reach out today.