How can logistical management benefit small business?
Administration and planning are the backbones of any successful business; in a quote often attributed to Sun Tzu, ‘the line between disorder and order lies in logistics’. Logistical management can be one of the most challenging aspects of honing your business operations, and a strong financial performance is attributed to a number of factors, such as warehousing, supply chain, labour, shipment, and information management.
As the Harvard Business Review suggests, your logistical strategy may give you that ‘competitive advantage that, unlike pricing or other actions, is hard for competitors to duplicate’. Whatever your aim, this guide should help you improve efficiency and decision-making, as we walk you through the logistical priorities for any small business or startup.
Keep track of your costs
As a small business, you are surrounded by pressure. You’re trying to give customers the best service and a memorable experience, while at the same time staying competitive — how then are you to reduce logistics costs, when each stage of growth is more challenging than the last?
Cleaning up your bottom line can feel like a tall task, but it is certainly achievable. Transportation constitutes the biggest logistical cost, as this aspect of the business moves your product through the supply chain. When you’re just starting out, navigating your supply chain is straightforward, but as you scale up, these processes become more complicated.
But there are tactics to avoid this. For example, you might consider consolidating your shipments into one freight to ease the costs of individual transportations, or diligently plan your delivery routes in order to save fuel and time. Using bespoke logistic services to help with logistical management is also beneficial for your understanding of each step of the process, which will help you choose shipping prices accordingly. What’s more, by creating as smooth an operation as possible, you can work towards improving customer retention. CitySprint neatly summarises the benefits: “Take the stress off solution creation so that you can focus on what matters most to your customers.”
Forecasting gives you the strength to make all your informed business decisions, but it is especially vital for developing data-driven strategies in order to manage logistics. However, forecasting logistics can be erratic, as it can often hinge on a combination of known unknowns and unknown unknowns, such as weather patterns, unstable fuel costs and the volatility of delivery costs.
As with any forecasting process, start with where you’re at. For small businesses, it is vital to understand the baseline level of costs, sales and other variables, such as your business schedule, in order to forecast the holy trinity: cash flow, sales and expenses. Crucially, grasping movements in demand, such as buyer trends, will enable you to create accurate and specific forecasts and adapt logistics accordingly.
This is especially true for products affected by fluctuating seasonal demand shifts, where you can ensure distribution on time before that season starts. As business advisors Productive summarises, nobody can get it right all the time, but good forecasting is the difference between having an estimate, and just pure guesswork.
Be visible and transparent
Increasing your visibility and transparency is important for building trust and loyalty with your customer base, allowing you to consolidate your business purpose and put it out there for everyone to see. However, it is important that you make your ability to see each step of your internal logistical operations crystal clear. This helps to narrow the gap between your supply chain and the external customer’s experience of your business.
With a visible supply chain, you can observe and access all of the events, transactions and other shipment data, and observe individual components and final products through every single process of the operation. Also of significance is the increased demand for convenient transportation, and you can use your clarified logistics structures to pre-plan more accurately based on up to date shipping statuses while sharing this information with customers. You can then improve the efficiency of your inventories — thereby reducing costs by speeding up supplier lead times.
Understand your goals and strategy
What do you want enhanced logistics to do for you? Is it increased efficiency, sales, customer experience or better relationships between retailer and carrier? By clearly understanding and outlining a blueprint of your aims, you can contextualise every business decision you make, and measure your goals accordingly.
One of the main targets of logistical management may be to just limit a business’s vulnerability to surprises. Interruptions in the supply chain, damages, delays and improper delivery, can all amount to wasted time and resources in time and resources. Tackling these costly hiccups thereby enhances productivity and improves business growth.
If the goal is to make your startup as efficient as possible from the get-go, you could seek distinct transport cost advantages, such as locating your warehouse closer to other points of your supply chain. If you want to feel inspired, Forbes has an in-depth look at several transportation management successes in a similar vein to this.
Focus on customer experience
Think holistically about the entire process of your target consumer’s journey — from purchase to delivery, to receival. Identify your customer’s wants by modelling data on demographics such as age, gender and location, and psychographics like purchasing habits. Following this, assess how your logistics process relates to them. Usersnap has a handy guide to creating a customer journey map, which consolidates this data into an acquisition strategy.
Perhaps you are running a brick-and-mortar, rather than an eCommerce shop. In which case, vet your recruited staff properly, only hiring individuals who are experienced in delivering incredible customer service. By creating a feedback system for customers both on your website or in-person, you can distinguish yourself from your competitors, while creating an opportunity for revising and optimising your services. This gives customers an enriching and personable experience overall while tidying up logistical processes which aren’t working and thereby saving you time and money — the bedrock of all business.