Supply Chain Performance
Supply Chain Performance

How can we reduce expenses in logistics?

Insufficient logistics planning can be very costly. Adapting correct cost-optimization strategies in the supply chain and warehouses is one of the most decisive actions of…

On June 16, 2022

Insufficient logistics planning can be very costly. Adapting correct cost-optimization strategies in the supply chain and warehouses is one of the most decisive actions of any logistics operator. Some of the measures to consider are:

Signing logistics cluster agreements
Clusters are groups of companies, which join their interests, in order to be more efficient. In the case of logistics, one of the objectives would be to take advantage of the transport between several clients, to deliver a common point. With this action, synergies are achieved in economic costs and, at the same time, it reduces pollution, the carbon footprint and traffic on the roads.

Achieving complete and optimal traceability
Knowing the traceability of an order means knowing the place and condition of the merchandise at all times. Customers demand complete and accurate traceability throughout the entire supply chain.

To this end, extensive efforts have been made by the manufacturers to the final delivery points, passing through the logistics operators – both in the labeling of the products, and in the computer systems that record the entire process.

Clear examples of these optimized processes are the barcodes, which we already consider common, but they, however, appear to be a simpler way, of identifying each product. These codes maintain a simple, unique and common language worldwide. Their evolution is given by the creation of BIDI codes, where the stored information is much greater and increasingly recognizable by any reader or even by the camera of our smartphones.

Investing in innovation and new technologies
It is increasingly necessary to find innovative solutions to improve and streamline processes and thus improve productivity and operating costs. Investing in innovation is one of the business pillars, to be more sustainable in our activity and offer value-added services to customers.

New technologies provide efficiency within the warehouse, but at the same time, when implemented in machinery and structures, they generate greater safety for workers.

An example of innovation and sustainability is our green hydrogen project, that we have carried out in Illescas:

Green hydrogen project. Start-up of a hydrogen generator at the Illescas warehouse, to supply hydrogen to forklift trucks, for internal use. Hydrogen is green because the energy needed to produce it is obtained through solar panels.

In this way, it is possible to save energy, stop using elements such as lead acid in batteries, not depend on the standard electrical supply for recharging, not generate pollutants and, of course, reduce the refueling time since only little is needed. It takes more than a minute to perform a full charge.

Efficient warehouse management
For many logistics companies, the activity within their warehouse corresponds to the largest percentage of their costs.

At the infrastructure level, it is important to take energy-saving measures, based on the installation of solar panels inside the warehouse, manage the machinery using hydrogen or other non-polluting fuels, and invest in sustainable insulation, buildings and warehouses.

Managing waste correctly, by focusing on its recycling, with the goal of zero emissions, and using modern and adapted machinery, which reduces technical failures, that ultimately slow down the logistics activity, is another way to reduce costs in the warehouse.

At the level of the computerized management system, it is crucial to have an adapted and scalable technology for customers, with good control of ABC and stock. Having tools to periodically carry out studies on warehouse preparation and movement flows, is essential. Similarly, being efficient in time and space is essential to improve productivity in the supply chain.

Avoiding excess obsolete inventory
Within the day-to-day logistics activity, and usually due to overstocking or mass production, products appear when they are about to expire or are not sold. In other cases, they have even lost part of their value. To this end, work is being done on communication with factories and customers, in order to give these products a prompt release, else otherwise they would be occupying a place in the warehouse with the associated costs. A very interesting option, and increasingly common, is to donate these products and thus arrive at a solidary solution.

On the other hand, it is necessary to anticipate and forecast market trends. It is necessary to take into account the products that are high in demand according to the season, assess the sales of other years, observe if the product is constantly growing, know the interannual deviations, promotions and the investment towards advertising.

In the same way, in logistics warehouses there are different ways of classifying products to avoid expiration, conservation status or inclusion as an unfit product. This implies that the products, with the closest expiration date, usually the oldest batches, will always be selected for the first shipments, as long as they meet the quality criteria established by the clients.

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