5 Strategies for Reducing Supply Chain and Logistics Costs

Advancements in technology have made it easier to buy and sell goods domestically as well as across international borders. However, to run a successful business, you need to have an optimized supply chain. 

Not only does this reduce the mismanagement of resources, but it also increases your business’s profitability and stability. The opposite is also true as poor logistical planning can lead to huge costs and customer dissatisfaction.

This is especially true for breweries. If supply chain costs increase, it can make it harder to budget your finances and keep your brewery afloat in the long run. So, how can you keep your business logistics flowing like a good pour? 

We’ve got five options for you—including outsourcing your logistics!

Understanding Logistics Costs

Minimizing your shipping expenses starts with understanding what drives them, especially as it relates to your supply chain and logistics. 

The majority of these expenses include transportation, shipment, labor, and inventory costs, all of which are incurred as you move your products from one end of the supply chain to the other. Let’s break these down in more detail: 

Transportation Costs

Transportation is what drives your goods (literally) from procurement to their final destination, meaning it likely constitutes a majority of your logistics costs.

Transportation costs include fuel and postage—not to mention costs from freight brokers and carriers—which are relevant to both inbound and outbound logistics. Poor transportation management can exacerbate costs through inefficient routes, as well as through delays that end up costing you money in the long run, too. 

Warehousing Costs

Warehouse costs can also add up, whether it’s the price of renting warehouse space, lease agreements, or purchasing commercial property as storage space. Storage space is a necessity, but paying for too much—or not enough—can be a costly mistake. 

Labor Costs

You keep your business moving by delegating tasks to your staff, who then take care of logistics and supply chain management. This incurs labor expenses, such as staff salaries, recruiting costs, employee benefits, and other administrative costs.

Inventory Costs

Inventory costs include money spent on storing or holding stock, insurance, packaging, and labeling for goods. Mismanagement of your inventory also leads to expenses related to stock shortages, loss, or damages, all of which can impact product quality. 

Implement These Cost Reduction Strategies

If you’re looking into reducing logistics costs, then you should consider implementing these four strategies into your operations:

1. Optimize Your Routes

Timely delivery is key to customer satisfaction. Optimizing your routes is one of the best measures you can take to ensure you save money and deliver on time. 

Plan out routes well ahead of time—the way your driver usually takes might not be the best possible route. Consider the following to optimize delivery routes:

• The type of delivery, such as curbside, threshold, or contactless
• The shipping address of where you’re delivering
• Routing data and relevant KPIs
• The capacity of your fleet and the load being shipped

With all this taken into consideration, you may be able to consolidate shipments to avoid having to make multiple trips to the same area or the same customer. 

2. Streamline Warehouse Operations

Streamlining your warehouse operations is a great way to reduce costs, and save on your broader logistics operations, too. It means having minimal downtime as well as avoiding unnecessary operational expenses.

Better inventory management helps you determine pain points in your automated systems and limit room for error in critical administrative tasks. These can include rent payments for warehouse space, data management, packaging, delivery, and storage of goods.

3. Monitor Your Supply Chain

To reduce logistics costs brought on by errors, delays, and other inventory costs, you must maintain the visibility of your supply chain. Much like warehousing costs, inventory disruptions can result in unnecessary business operation expenses. 

One way you can do this is through the use of radio-frequency identification (RFID). Using RFID tags and scanners is more efficient than barcode scanning, and can help you better monitor where things are and reduce supply chain costs.

4. Centralize Procurement

As you know, logistics isn’t just about moving your products—it also involves getting what you need to make your products. For breweries, this means procuring the ingredients used to brew their drinks, whether it’s beer, cider, seltzer, the list goes on. 

Centralizing the procurement of these resources is key. You can save significant money by dealing with one supplier rather than several. Even better if that supplier is located near where the products need to go. 

5. Outsource Your Logistics

Consider outsourcing logistics to a third-party provider to see an immediate reduction in your direct logistics costs. Expect to see valuable savings across the board when you employ professionals who do things right the first time. 

Hiring a third-party logistics provider means you won’t have to invest in expensive trucks for your business, which by extension eliminates fuel costs and improves operational efficiency. Put the ball in their court and reap the benefits of their expertise! 

Reduce Your Beverage Logistics Costs with Brew Movers

When it comes to outsourcing your inbound and outbound logistics, Brew Movers should be the first team you call! 

Our experience in the beverage logistics industry has allowed us to build a distribution network of carriers and fleets that inbound logistics teams lack. By partnering with us, you’ll also get expert documentation handling, reduce the burden of back-office management, and more free time so you can focus on what matters most—your product!

Contact us now to learn more about how we can help reduce costs on your inbound and outbound logistics with Brew Movers shipping solutions.