Looking for Cost Savings in the Chaos

by LJM Group

Spend More Time on Business and Less on Shipping

The severe changes the COVID-19 pandemic has had on e-commerce logistics have prompted businesses to prioritize reducing their logistic costs. With logistics costs typically comprising up to 11 percent of sales revenue1, the pressure is on to find methods to improve your bottom line. The complex operation of coordinating people, facilities, transportation, storage, and goods is the heart of a business, affecting everything from operations to the customer experience.

There are many ways to improve supply chain processes that will save money, but it must start with fully understanding every expense and identifying components that can be improved. Once a solid grasp on spend is had,  companies need to adapt and apply new principles to workflow processes. Just because you’ve always done something a certain way, doesn’t mean you shouldn’t change it.

Here are some methods for reducing logistic costs:

Gain insight: Without insight, you’re moving blindly into the future. Insight provides the supply chain visibility you need to improve inventory accuracy, fulfillment methods, labor, transportation, and even customer service. The number of supply chain professionals who say they’re currently using predictive analytics at their company has grown 76% from 2017 to 2019. In 2019, 30% of respondents said they were currently using this technology, up from 17% in 2017. Another 90% of respondents said predictive analytics is a technology “that will have an impact on the supply chain in the next 10 years.”2

Optimize Transportation:  Transportation costs make up a significant part of a company’s logistic spend. With a multicarrier shipping strategy, an e-commerce-based business has the opportunity to reduce shipping costs through negotiating power. It opens your business up to receive the most competitive pricing, with the added benefit of more efficiency in fulfilling orders.

Automate Processes: Automation is key to lowering costs associated with a supply chain. It can reduce staff requirements, increase production operations, improve e-commerce fulfillment and create a more proactive approach to ensuring customer satisfaction. As automated, cloud-based transportation and logistics system has become affordable and easily integrable, a company can implement major strategic changes that are more cost-effective.

Improve Customer Satisfaction: The best way to keep business growth trending up is by keeping customers happy. There is a direct correlation between customer satisfaction and overall cost reduction. The more customers you have, the more flexibility you’ll have to spread out the cost of logistics, ultimately improving your bottom line.

Streamline Inventory Management: Optimal inventory management meets customer demands while remaining cost-effective. Allowing inventory accuracy to fall by the wayside runs several risks, so finding that sweet spot is an important part of supply chain management. Having less inventory than you actually think you do leads to selling stock that’s not there; overstock leads to products becoming obsolete, and a wasted expense. Implementing a more streamlined reporting system will prove to save money.

Every aspect of a supply chain is an expense. With the appropriate tools to manage the complexity of a supply chain, an organization will have greater opportunities to adapt as needed to create operational efficiencies. As a leader in the parcel shipping consulting industry, LJM Group is committed to helping their customers save time and improve profitability. We closely examine your operation and monitor your spending so you don’t have to.


  1. 2019 23rd Annual Third-Party Logistics Study
  2. 2019 MHI Industry Report
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