Uncovering hidden costs in your supply chain

Reducing transportation logistics cost is synonymous with efficient supply chain management, but savings on supply chain deliveries is only a possibility once all aspects of the supply chain have been assessed. Typically, ocean freight is just 30% of your total supply chain costs. Inefficient handling of the shipping processes or excessive focus only on ocean freight while being lax with other aspects often results in importers ignoring possible hidden costs. These costs can be found through careful evaluation and taking a top-down approach to the logistics process.

Faulty assumptions can also lead to these costs being overlooked. Most hidden costs are variables, meaning that they can be nullified or minimized through careful decision-making. An effective supply chain management system can illuminate these areas.

Let’s look at some of the common hidden costs and how you can stop leakage of your revenue.

Poor supply chain management equals to suboptimal logistics

One of the key aspects that leads to hidden costs is poor supply chain management. Solving this starts with finding the right logistics partner, as selecting the correct logistics mode is the first step to ensure cost reduction.

Every logistics company has multiple carrier options. Depending on the ease and urgency of delivery and associated shipping costs, it may make sense to transport the goods by train (if available) rather than by sea or even land routes. Supply chain issues can be solved through utilising every aspect of the logistics partners’ network. As such, a cargo shipping company with unrivalled access to sea routes doesn't need to send goods using ships only. An end-to-end logistics provider that has operational scale and the right technology can help you optimise routes. For example, if you have an urgent delivery, the logistics company can arrange for your consignment to be ferried by train if there’s a station close to you. Or take an instance where you have to deliver cargo (such as PPE equipment) on expedited basis: your logistics partner should be able to reroute delivery through air.

Strategic partnership immediately brings in efficiency and obviously reduces costs as well, solving overall supply chain issues with innovative solutions. At every juncture or each sub-milestone level, by optimise the internal logistics mode strategically, cost saving actions can be enacted.

Fixing undesirable contract terms grants an efficient supply chain management

One common error made by new importers is falling prey to contract terms that may be defined as unjustifiable and therefore, less desirable. This mostly happens when the importer tries to optimise the logistics division to fulfil increased business needs.

Even importers who have been in the business longer, can forget to check the fine print, and end up paying a price for their oversight. Efficient supply chain management and business growth happens smoothly when you have favourable pricing terms and conditions. As a new player in the realm of the importing business, working with integrated logistics partner, you can work on better contract terms, as your partner is backed by depth of experience and innovative technology. As a more experienced company, you can still find favourable solutions with an integrated logistics partner, especially in a time of upheaval and change.