How to Decrease Logistics Costs During the Supply Chain Crisis

The ongoing supply chain crisis has caused supply chain professionals to reassess their logistics solutions. While there are many factors that contribute to a company’s logistics costs, there are certain measures that can be taken to reduce them. The supply chain crisis has created a ripple effect across the global economy. The pandemic has caused a shortage of raw materials, labor, and shipping containers, which has led to a surge in logistics costs. In addition, the ongoing trade disputes and geopolitical tension have added to the challenges faced by businesses.

The Indian supply chain industry has experienced its fair share of challenges in recent years. The COVID-19 pandemic disrupted global trade and exposed vulnerabilities in supply chain networks. Lockdown measures, labor shortages, and transportation constraints all contributed to increased costs and delays.

Additionally, the Indian supply chain industry faces specific challenges due to its size and complexity. The country’s vast geographical spread, varying infrastructure quality, regulatory bottlenecks, and low technology adoption can hinder the smooth flow of goods and materials. These factors, combined with the ongoing crisis, have put significant pressure on logistics and increased costs for businesses across various sectors.

The Indian supply chain industry plays a significant role in the global market, serving as a major hub for manufacturing, exports, and imports. Analyzing the industry’s current state is essential to identify to overcome the challenges faced by the industry and to reduce logistics costs during the supply chain crisis, Indian sup[ply chain industry can adopt the following strategies:

1. Improve Inventory Management: Efficient inventory management plays a crucial role in reducing logistics costs. Analyze demand patterns, lead times, and supplier reliability to ensure optimal inventory levels. By avoiding excess stock and minimizing stockouts, you can significantly reduce carrying costs and the need for rush shipments.
2. Enhance Supply Chain Visibility: Visibility across the supply chain is essential for effective cost management. Leverage technology and data analytics to gain real-time insights into inventory levels, order status, and transportation routes. This enables proactive decision-making, reducing the chances of delays and ensuring timely delivery.
3. Optimize Transportation Strategies: Transportation costs often constitute a significant portion of logistics expenses. To minimize these costs during a supply chain crisis, consider the following approaches:
   • Consolidate Shipments: Combining smaller shipments into larger ones reduces the number of trips and maximizes truck capacity utilization, leading to cost savings.
   • Mode Shifting: Evaluate alternative transportation modes such as rail or sea freight, which can be more cost-effective for certain shipments, particularly for long distances.
   • Collaborative Logistics: Partner with other businesses or leverage third-party logistics providers to share transportation costs. Collaborative logistics can lead to better capacity utilization, reduced empty runs, and improved efficiency.
4. Opt for Lean Warehousing: Warehousing costs can escalate quickly, especially during a supply chain crisis. Implementing lean warehousing practices can help reduce expenses:
   • Space Optimization: Analyze warehouse layout and product placement to maximize space utilization. Efficiently organize products based on demand frequency and streamline picking processes to minimize travel time.
   • Just-in-Time (JIT) Approach: Adopt a JIT inventory strategy to minimize storage requirements and carrying costs. This approach ensures products arrive at the warehouse shortly before they are needed, reducing excess inventory and associated costs.
5. Leverage Technology Solutions: Harnessing technology can significantly improve supply chain efficiency and decrease logistics costs. Consider implementing the following tools:
   • Warehouse Management Systems (WMS): WMS enables efficient inventory tracking, order processing, and space utilization, leading to reduced costs and improved productivity.
   • Transportation Management Systems (TMS): TMS automates route optimization, carrier selection, and load consolidation, resulting in cost-effective transportation operations.
   • Internet of Things (IoT) and Sensor Technologies: IoT devices and sensors provide real-time visibility into shipments, enabling proactive decision-making and minimizing disruptions.
6. Infrastructure Development: The Indian government has been actively investing in infrastructure development to improve logistics efficiency. Businesses can leverage these developments by strategically locating warehouses and distribution centers in areas with well-connected transportation networks, reducing transportation costs and transit times.
7. Sustainability Initiatives: Green initiatives not only benefit the environment but can also result in cost savings. By optimizing transportation routes, investing in fuel-efficient vehicles, and adopting eco-friendly packaging practices, businesses can decrease their carbon footprint and reduce costs associated with fuel and packaging materials.

Despite the challenges, the Indian supply chain industry has demonstrated resilience and adaptability. It also presents an opportunity for businesses to reimagine their supply chain operations and build more resilient and efficient systems. By adopting these strategies and staying adaptable, the Indian businesses and supply chain industry can emerge stronger and better prepared for future disruptions.

The ongoing supply chain crisis has forced businesses to reevaluate their strategies and seek ways to decrease logistics costs. While the current supply chain crisis presents challenges, it also offers an opportunity for businesses to innovate and transform their supply chain processes. Companies can also reduce their supply chain costs and attain long-term success by partnering with reputable 3PL providers that possess extensive experience and capabilities, thereby optimizing the effectiveness of their operational strategies. TVS Supply chain solutions is a leading 3PL company that aims to be a proactive supply chain partner backed by technology enhancers, which aid in the process. We have vast experience and capabilities in managing complex supply chains as a 3PL/4PL player.

TVS SCS offers bespoke solutions to meet the specific needs of our clients. We manage a complete supply chain from a single platform to fast-forward client business. We offer a full range of services and can support customer needs on a global basis, whilst delivering benefits such as improved product cost and process efficiency. TVS SCS creates value in the supply chain by applying best-in-class planning, inventory management, and procurement services.

Our approach to purchasing reduces unnecessary stockholding and purchasing of goods through intelligent inventory management, driven by historical and forecasted usage data and known event planning as well as just-in-time deliveries. Improved availability of goods, accurate inventory planning, and effective expediting activity ensure that the required amounts of goods are available when they are needed to meet the KPI time based on the order type.