| In the current economic climate many businesses are | | | | is their network strategy. All too often, businesses |
| looking to reduce their costs wherever possible. One | | | | operate to a tried and tested logistics map - typically |
| of the major areas where this can be done is | | | | an infrastructure of depots and routes to customer |
| transport. | | | | sites - that has not changed for years. Reviewing |
| It might shock many logistics managers to hear that | | | | these networks can save tens of thousands of |
| recent research suggests that as many as 65 per | | | | pounds per month through simply taking a fresh look |
| cent of business are paying 15 per cent over the | | | | at the location of key customers and how their |
| current market rate for their transport provision from | | | | demands are satisfied. |
| third party logistics (3PLs). While there is little | | | | Inevitably, customers move location and their order |
| businesses can do to reduce this figure in the | | | | profile changes. However, these changes are rarely |
| short-term, this fact suggests that too few users of | | | | reflected in an evolving supply chain network. |
| third party logistics providers undertake meaningful | | | | Similarly, decisions on customer allocation - distribution |
| benchmarking to assess the relative cost of | | | | centres that serve specific customers - often create |
| transport. | | | | unnecessary supply chain inefficiencies. |
| Clearly, operating a comprehensive tender process | | | | Modes of transport are another area to consider. If |
| that is professionally managed and engages the | | | | you use air freight, see where you could downgrade. |
| market seriously is at the centre of the process. | | | | While it might be important to certain niche markets |
| While there may be little room for negotiation for | | | | to stay that close to emerging trends, in many cases |
| businesses that have just embarked on a three-year | | | | there is no reason why costs could not be reduced |
| fixed contract, it is important to note that agreed | | | | by employing sea freight to move less time-critical |
| breaks within that time for renegotiation linked to | | | | product lines. |
| performance are a must for companies. This | | | | Team Work |
| mechanism should also include an agreed way to deal | | | | Reducing transport costs requires educating the |
| with fuel price fluctuations as well as other issues | | | | whole company, not just the logistics manager. For |
| such as health and safety performance and gainshare | | | | instance, buyers and planners must be fully aware of |
| mechanisms where appropriate. | | | | the true cost of using air freight on an item-by-item |
| With job losses in the logistics sector already a | | | | basis to lead to a change of behaviour. |
| reality, it's likely that capacity may come out of the | | | | These are just a few things to think about which |
| market, which should create opportunities for | | | | could help you reduce your transport operations |
| businesses to take a fresh look at transport | | | | costs. A supply chain consultancy could provide even |
| provision. | | | | more tailored advice on how your business could |
| Network Strategy | | | | reduce supply chain costs. |
| Another area that is often overlooked by companies | | | | |