How cutting costs can improve your order fulfillment success

Every business focuses on various areas of improvement such as cost cutting and customer service, but for order fulfillment organisations these two areas in particular, can be linked to drive greater benefits.

The easy wins to better order fulfillment

The freight industry has two major expenses, fuel and depreciation – the condition of vehicles (and plant, for order fulfillment companies) has a direct effect on your profit, so maintenance and preventive action are always cheaper and more effective than major repairs or delayed maintenance that creates greater levels of cost.

Moving freight and delivering orders are both essential, and expensive. The better you plan routes, the better you use your fuel, so scheduling drops with care, using telematics where possible, and sharing information on the cost of fuel with drivers will help reduce costs and improve consumption.

The dynamics of load optimisation – for order fulfillment, load optimisation is a challenging concept. The industry gold standard is a Full Truck Load (FTL) and it’s the ideal because of it:

  • reduces transportation cost
  • cuts the number of deliveries
  • minimises damage to vehicles through partial loads
  • benefits the environment through reduced CO2 emissions.

But for many companies, much of the time, and especially for those in Last Mile Delivery (LMD) Partial Truckload (PTL) is the daily experience. Reducing the effects of PTL can be managed by using freight companies to find available deliveries that will bulk up vehicles and benefit profits or by outsourcing your own freight to an exchange or a third party logistics (3PL) service.

Investment in your human resources

What is often described as the ‘intangible cost base’ for transport companies is in fact its human resources. No profit and loss statement will recognise the cost of inefficiencies in this area, but poor performance, lack of enthusiasm and stress all have substantial effects on any organisation’s bottom line. Pick and pack staff, drivers and customer service responders are all exposed to high levels of tension that come from deadlines, customer demand, traffic and unexpected problems. So what can you do to help, and why bother?

Drivers often don’t get to eat or exercise and these two elements, in combination can lead to fatigue, management of pain with over-the-counter painkillers and mood swings. A 2017 research study revealed that driver fatigue could contribute to around 20% of road accidents – and that over 50% of drivers in the UK admit to having driven over their hours or when they know they are already fatigued. Drivers can help each other if you encourage them to share information about where they can get good, healthy food, where to find the best overnight park-ups and how to stay fit on the road. Offer rewards for the best ideas and implement the best suggestions.

The other side of this equation is to make sure that you don’t outsource what you need to be doing best yourself. Direct contact with actual or potential customers is something that you’ll probably want to keep in-house, not just because you can control the process but also because it contributes to your metrics, which gives you greater understanding of your customer base so you can trim out extraneous costs and focus on those that work for your core audience.

Give your drivers every advantage

If you employ drivers, their habits will inevitably impact your profits. Over forceful acceleration or braking will consume more fuel, idling engines can reduce miles per gallon by up to a third, starting vehicles and leaving them to ‘warm up’ at the beginning of the day can increase your costs by a quarter. Of course it’s difficult to change the behaviour of people who are out on the road and under pressure to make deliveries on time, but resourcing drivers effectively can be a way to encourage them to contribute to your efficiency drive.

Smart route planning with GPS devices can be limited purely to drop management or can be used in a more sophisticated fashion – to calculate journey times in relation to difficult weather conditions or local events that may impact drive times.

Giving drivers sub-standard vehicles not only puts them at risk but can encourage them to drive more dangerously because they have little investment in the infrastructure. Regular vehicle inspections are a health and safety measure, but giving regular feedback on repair lists, so drivers can see their issues moving towards resolution can give them confidence that you’re not ignoring their problems.

The technology advantages that improve order fulfillment

Looking at variable costs like fuel and stationery will help you reduce your costs because while fixed costs such as relocation or fleet purchases are generally planned, changes to variable costs happen randomly and may not be readily recognised. Even the most inexpensive accounting software can be used to create a monthly profit and loss analysis – it can reveal the places where your costs are slipping out of control in time for you to pull things back around.

If you use a warehouse, consider re-ordering your inventory for swift handling. This means classifying every inventory time from fast moving (batteries etc.) to slow-moving (large equipment items) achieving two results:

1 – it allows you to prioritise rapid replenishment of your fastest moving stock

2 – you can reorganise your warehouse so that popular stock is centrally located while slower moving items can be more remote from the picking and packing area.

Keeping on top of your stock and getting the most popular items out of your warehouse most quickly both gives you happier customers and better cashflow.

Consider automation – you don’t have to go as far as robots! Some of the simplest automated processes are within the reach of every business, such as handheld scanners to log inventory as soon as items arrive at, or leave, your warehouse. This kind of automation cuts costs in two ways – it reduces human error and it speeds up stock processing, in some surveys by up to 48%!

Expert help

Insurance is a much neglected cost cutting area – a little extra research into finding the best insurer for your goods and your fleet can actually decrease your expenses and give you better business leverage for things like obtaining business loans or investment.

Explore 3PL companies in your local area. Of course, it costs money to contract out your business operations but the rewards for finding great 3PL partners include reduced stress for your staff, better efficiency in outsourced operations and consequently – faster and smoother operations of your retained in-house functions.

We provide warehousing and distribution for a variety of businesses located throughout the UK, with the majority providing 3PL services and efficient stock management.

Details of warehouses and the services each offer, to ensure order fulfillment is achieved to the highest standard, can be found in our online directory.

Simply contact us today on 0800 1707 555 to find warehouse space for rent in your desired area, let us help you fulfil your business needs.

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