Running your business and managing your logistics can be complicated. Managing your logistics can take up a lot of time and resources to grow your business when you’ve got to manage a growing number of orders. Shipping prices are unstable. There is a need to procure new and up-to-date software, deal with the cost of labor, and meet customers’ demand for quick delivery. We’re going to at the costs associated with managing your logistics to help you with the information you need to make decisions about managing your logistics or outsourcing them to a fulfillment center.
MANAGING YOUR OWN LOGISTICS
Managing your business and logistics can be challenging due to the volatility in transportation rates, the constantly changing government regulations, and the rush for new management technologies. The time and resources spent on packaging orders should go to other parts of the business. Being your carrier and making all your deliveries might look possible, but as demands for your products grow, it becomes unsustainable as you will find it challenging to meet demand.
Today, many companies outsource some or all of their logistics needs like transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding to fulfillment centers or logistics centers. Outsourcing these logistics saves you time and money. The logistics company takes full responsibility for inventory management and updates you on the status of inventory and the quantity of available stock. It provides your business with cost-effective solutions to handle a larger volume of orders, even on a global scale.
THE COSTS OF MANAGING YOUR OWN LOGISTICS
The logistics cost for companies varies depending on the company’s products. Managing your logistics includes procurement, storage, labor, packaging, transportation, management software, warehouse equipment, and fleet maintenance.
Transportation – Transportation is one of the most important aspects of logistics management. It takes care of the movement of your products throughout your supply chain. Transportation costs cover the costs of transportation services, the cost of fuel, and the cost of postage.
Warehousing – The cost of warehousing covers the cost of rent and the price of storage space. It also includes long-term lease agreements, purchase of commercial property, procurement of a warehouse management system, and the administrative cost of operating a warehouse.
Fulfillment – Warehousing and fulfillment go together in logistics management. Fulfillment fees are the initial set-up fees, receiving fees, storage fees, and pick and pack fees. It also includes box fees, custom labeling, order insert fees, and order returns fees.
Inventory – It is a huge cost associated with logistics management. It is the cost of procurement and storage. It includes ordering cost, carrying cost, shortage or stock out cost, and replenishment. Other costs associated with inventory are the cost of loss, pilferage, shrinkage, obsolescence, sales discounts.
Labor – Labor cost covers the cost of management, customer service, and performing logistics tasks. The workforce and labor costs may also include the cost for recruiting and hiring hourly employees, payroll, liability insurance, and payment of employee benefits.
The scope of a business and the complexity of its supply chain may also affect the cost of managing logistics. Other factors to affect logistics costs are the cost of fuel, the cost of rent, the cost of hiring commercial drivers, delayed port arrivals, and the international tariffs and regulations.
FINAL THOUGHT
There are a lot of hidden logistics costs, and managing your business logistics can be huge due to the challenging logistics environment. Outsourcing your logistics, warehousing, and fulfillment to a logistic company like Vancouver Cross-Dock can help reduce logistics costs immediately. Contact us today for complete end-to-end logistics solutions.