Logistics for Small Business
Last Updated: Jan 30, 2015
Whether your SMB manufactures guitars, heavy equipment, or foodstuff, the logistics of moving your products safely and on time through your distribution network can be a costly nightmare. Here are tips for better managing the process.
For many small businesses, transporting your product from one place to another can be a nightmare. Many small businesses have to learn the hard way, logistics is no laughing matter. It can be stressful, costly, and can pose a significant risk to your business and its reputation. Suppose there is a mistake being made somewhere along the supply chain, and a client receives the product much later than anticipated. Or perhaps there was a miscalculation in regards to the cost, leading to a significant cut in profit margins. Or perhaps something happened along the way in transportation that led to the product becoming damaged, are you covered by insurance? If your business deals in physical products, understanding and factoring in the logistics of it all is absolutely crucial, and can be easily overlooked or miscalculated.
So with all that being said, here are some helpful tips that could ease your logistics related troubles:
Consider a third-party
If you have the budget for it, you can hire out an industry specific third-party logistics provider. Depending on your specific market, you can find a company that specializes in the logistics end of that particular market. Outsourcing, more or less, the entirety of your logistical needs can free up your time and allow you to focus more on innovating and growing your business. This may not be the most cost effective option, but it could be the simplest and most convenient.
Consider teaming up with a partner
Start networking with other small businesses who may be in the same situation and may face some of the same budget restrictions. Most logistics companies set their prices based on volume, and teaming up with a partner could provide a more cost effective way to meet your needs. This particular option needs to be explored more thoroughly, you need to take into account not only the specific details of the logistics company, but also the specific needs of your partner.
Try a small business logistics service from a major provider
If the size and budget of your business cannot warrant investing money in a specialized logistics provider, perhaps it could be beneficial to explore what some of the major shipping and transportation providers offer. UPS, FedEX, and DSL all offer services that cater to small businesses. Given their reputation for reliability, this could easily be a viable option for your business.
Consider an industry specific provider
Depending on your particular business, you may find it more advantageous to hire a specialized logistics provider. This is not to be confused with the previously mentioned third-party option, which may specialize in serving small businesses. An industry specific provider would know the specifics on how to handle and care for the product being delivered. Consider a business that produces and sells wine, it may be more beneficial for that particular company to hire a logistics company that knows how to transport and care for something of that nature. The same could be said for food products, or even clothing. The quality of the service and care for the product in transportation, is of equal value to the cost of hiring the logistics company. You may spend more money on an industry specific provider, but consider the risk of hiring a provider that does not specialize in your particular market. If a product is mishandled or damaged, that’s money down the drain.
It is important to weigh the pros and cons when considering a plan for your business’ logistical needs. Some providers may charge a higher price for their services, but that may also result in a lower risk of mishandling or damage. It is also important to consider the reliability of a company being considered. Will this company deliver on time? Will my product be damaged, mishandled, or even lost? There are a lot of factors to consider, and its important to consider them all in order to find the most efficient and cost effective option for your business.
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Brad Egeland is a Business Solution Designer and IT/PM consultant and author of A Real World Project Manager’s Guide to the Successful Project. He has over 25 years of software development, management, and project management experience leading initiatives in Manufacturing, Government Contracting, Creative Design, Gaming and Hospitality, Retail Operations, Aviation and Airline, Pharmaceutical, Start-ups, Healthcare, Higher Education, Non-profit, High-Tech, Engineering and general IT. Brad is married, a father of 11, and living in sunny Las Vegas, NV. Visit Brad’s site at www.bradegeland.com.