The logistics planning process is lengthy, as it covers a lot of different logistical activities. However, a comprehensive logistics strategy – one that embraces numerous logistical processes – not only optimizes individual logistics procedures but also promotes their collaboration to enhance supply chain management. Here are some of the logistics activities that e commerce firms should consider, as well as advice for planning each.
Logistics Planning Tips
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- Treat procurement and production as part of your logistics network, rather than a silo. This allows you to keep track of the supply chain from end to end, lowering costs.
- Find a qualified supplier or manufacturer. In the event of delays, outages, and shutdowns, diversifying your supplier network may assist avoid stockouts.
- Make sure to include demand forecasts in your procurement planning so that you don’t end up over or understocking particular items.
- Calculate reorder points and production lead times to time replenishment correctly (and take into account any potential delays caused by port congestion).
- Keep track of raw materials in your inventory management. Both “work-in-progress” or WIP inventory, as well as production inventory, should be tracked while in transit and during inventory accounting.
- Implementing receiving best practices (documentation before and during reception, counts, storing, and recording SKU units and locations) streamlines the transfer of completed items while keeping inventory organized.
Distribution and transportation
- If your order volume and profit margins are sufficient, consider spreading your inventory across the United States (and internationally, if necessary). Physical distribution of products has an impact on warehousing and delivery costs, which might result in significant cost savings (and shorter transit times).
- Evaluate the most cost-effective methods for moving finished products and freight from the manufacturing facility to your warehouse(s), including ground, air, and/or ocean shipping.
- Use multiple distribution channels, such as wholesalers, merchants, distributors, or DTC ecommerce shops.
- Use a distribution management system, such as Launch Fulfillment, to further optimize your inbound logistics for speed and cost.
- To avoid stockouts, calculate reorder points and safety stock levels.
- In a nutshell, there are several aspects to an internet-based inventory accounting system. But what you’re looking for is all the data from this particular website.
- Use the FIFO (first in, first out) method to keep units moving in a reasonable time frame, especially if your items are perishable.
- To assess whether your inventory counts are accurate, compare the stated counts to actual counts on a regular basis. If you’re in a hurry, consider performing a spot check on one SKU between comprehensive audits.
- Invest in an inventory management program (IMS). This system should include real-time reporting, as well as help you plan where to distribute your goods.
- Consider whether renting your own warehouse or hiring a third-party logistics provider with access to a large storage facility is the most cost-effective option for you. If your brand is still relatively new, working with a 3PL may be the greatest value for money (but scaling should not be neglected for larger businesses).
- If you opt to rent, bear in mind the hidden expenses of warehousing, such as labor, equipment, and insurance.
- To minimize human error and increase operational efficiency, use automation in every warehouse operation.
- To ensure that the company’s SOPs, quality control measures, and efficiency are all in good working order, conduct regular warehouse inspections.
- Invest in a warehouse management system (WMS) that is integrated with your ecommerce platform and compatible with warehouse equipment.
- Organize your inventory to make the picking process easier (zone picking, wave picking, and batch picking are popular strategies).
- Plan for kitting and/or customizations that your customers may want to include in their orders, such as gift notes, inserts, or customized packaging materials.
- Decide which fulfillment strategy is right for your company right now, and what alternatives to explore in the future. Self-fulfillment may be the greatest solution for small businesses, but as your business expands you should look at more scalable solutions like a 3PL collaboration.
- If you expect to maintain an order accuracy rate of at least 96-98%, plan to keep your inventory updated. You’ll almost certainly need to switch methodologies if you can’t meet this goal with your current fulfillment approach.
- When it comes to outsourcing to a 3PL, make sure their pricing structure is clear and upfront (e.g., about picking and packing costs).
- Assessing which last-mile carriers would be the best fit for you (based on the types of items you sell) is a key stage in the process. If you pick a 3PL, they may frequently get bulk discounts on numerous carriers and services to offer you lower rates.
- Reduce zones you’re shipping to by sending stock to strategic locations, if this is advantageous financially for your company. Keep track of shipments as they move through the system and provide tracking information to the customer. Make sure any last-mile delivery solution you choose offers tracking features.
- You’ll want to have a memorable unboxing experience. Consider investing in custom branded packaging, free samples, or unique notes to make your delivery stand out.
- Take advantage of the additional shipping choices that can benefit your bottom line, such as two day and expedited delivery. While it will take some work to do so inexpensively, you’ll be a lot better positioned to satisfy buyer expectations and improve conversions. In exchange for free shipping, consider setting minimum spending requirements.
- Sustainable or eco-friendly packaging is a good idea. SIOC (“ships in its own container”) packaging not only is environmentally considerate, but it is also cost-effective for shipping and packing.
- Create a flexible return policy for your business and make it as clear to clients as possible (including instructions for returning an order). Also, be sure to distinguish all returns into manageable or uncontrollable categories, since this will assist you in reducing returns later on.
- Decide where returns will be sent back to. The fulfillment or distribution center where they were produced, a retail location, a warehouse, or even your home are all possibilities.
- If you choose to take the path of least resistance, automate the returns process (which is feasible with the previous bullet) or transform returns into exchanges.
- Use a returns processing tool to minimize the amount of time and effort required in processing returns.
- Decide what to do with returned items, such as whether they will be sent back onto inventory shelves, given away, recycled, or repurposed.
- Don’t be shy about asking for consumer feedback! Customer reviews can be a powerful instrument for internal change, especially in the case of returns (as long as you act on this information to decrease your return rate). Important to understand when it comes to logistics.