It’s The Hidden Costs That Get You
You’ve just read your financial statements and found that you’ve saved a lot of money on your logistics costs. However, you don’t understand why this isn’t showing up in a better bottom line.
This is a common problem which is usually due to the hidden costs involved with logistics. If you are only attributing the direct costs of your deliveries and the price you pay to your trucking companies, you may be missing a lot of the hidden costs involved with your overall logistics.
Improper utilization of your warehouse space can result in the need to move products multiple times within your warehouse before they are finally loaded onto a truck. This costs time which, in turn, increases costs. Additionally, ineffective routing or the inefficient management of a fleet can also cause expenses to rise, even when you thought you were paying less.
Ineffective personnel management can result in more time being spent on logistics than necessary if you properly train those employees. Their salary for that added time does not show up as a cost of logistics, but is very real and goes right down to the bottom line. You might be assigning logistics functions to people not trained in this function who fail to understand how to save money in the process beyond obtaining a lower cost for the actual deliveries, either to you or to your customers. A small investment in training the right people can result in savings much greater than the cost.