Depending on the industry sector, supply chain logistics costs account from 5% to 50% of a product’s total landed cost – so on average, distribution can take around a third of a manufacturer’s go-to-market investment. When breaking this down further, fuel consumption is a large proportion and in itself presents a volatile risk factor that makes it difficult for both manufacturing and distribution organisations manage profit forecasts.
The balance of distribution and inventory costs is a juggling act for manufacturing and distribution companies, particularly with the practice of lean inventory strategies and just-in-time production methods – putting pressures on the flexibility of distribution approaches.
Fluctuating oil prices are out of businesses’ control, but there are measures that can be taken to mitigate risk; from hedging fuel prices, consolidation of shipments, through to network optimisation with centralising/decentralising of Distribution Centres.
Controlling logistics variables
Another way – and that is open for all size businesses – is to focus on eradicating the variability from transit times – thus positively impacting on the ability to manage fuel consumption and costs. Simple measures, such as establishing specific delivery dates with key and frequent customers will consolidate drop offs, further reducing your warehouse-to-market transportation costs.
In addition, by proactively planning and optimising routes you can find the most cost effective itinerary; this can develop into Professional Services organisations and Service Management operations to allow for optimised scheduling and job management. We will discuss this in more detail in a later blog.
Empowering your delivery drivers with the means to be more efficient also makes the last mile work harder for your organisation and can also help with increased customer service; which is sometimes (especially for distributors in a competitive environment) the best USP you can aim for.
The balance of logistics flexibility and cost-effectiveness is not an easy science
Technology that extends your ERP’s functionality into the field, such as Prodware’s Mobility Suite means that deliveries can be rescheduled easily, partial deliveries can be made, proof of delivery (POD) signatures can be PDFed and stored against the customer record – ensuring a full 360 degree view of the customer is achieved. Scheduling is made easy with the ability to visualise product items, map views and via graphical planning.
Specific mobile enterprise applications such as this, directly connect with your ERP, such as Microsoft Dynamics NAV to help remote workers access your business management system without the need for double entry or delayed information exchange. From a customer point of view, your organisation becomes a more productive and flexible supplier, and from your internal perspective, all business areas become integrated, controlled and efficient.
Speak to Prodware about your mobile journey and how we can help control costs and increase distribution flexibility for customer satisfaction and more effective supply chain management.