Reducing logistics costs by implementing fulfillment
The significant increase in energy costs last year has had a significant impact on e-commerce businesses and individuals. For businesses, the increased cost of fuel and other energy-related expenses has led to higher shipping costs and operational costs which has eaten into profits. In some cases, businesses have been forced to raise prices or reduce their product offerings in order to offset the higher costs.
The COVID-19 pandemic has had a significant impact on the way people shop. In the early days of the pandemic, many people were forced to stay home and avoid public places, which led to a surge in online shopping. According to a study by Adobe Analytics, online retail sales in the United States grew by 23.4% in April 2020, compared to the same month in 2019.
As the pandemic has continued, online shopping has remained elevated. In November 2021, online retail sales in the United States grew by 19.2%, compared to the same month in 2020. This growth has been driven by a number of factors, including the continued preference for contactless shopping, the expansion of e-commerce offerings, and the increasing availability of fast and free shipping.
A recent study by Forrester Research found that 60% of consumers plan to continue shopping online even after the pandemic is over. This suggests that the shift to online shopping is here to stay.
However, today many companies find themselves in a difficult situation, as they are trying to cut back on energy and operational costs. After a significant increase in online shopping during Covid times, the euphoria has disappeared as nowadays consumers are showing more restrained buying behaviour. The main reason for reduced consumer spending is sky-high inflation which reached its peak of 10.6% in October 2022 in EU and June 2022 in US.
There is a lot of pressure for e-commerce companies to stay afloat and in this article, we will discuss how the companies can reduce the cost of logistics, energy use and operational costs.
The COVID-19 pandemic has had a significant impact on the way people shop. In the early days of the pandemic, many people were forced to stay home and avoid public places, which led to a surge in online shopping. According to a study by Adobe Analytics, online retail sales in the United States grew by 23.4% in April 2020, compared to the same month in 2019.
As the pandemic has continued, online shopping has remained elevated. In November 2021, online retail sales in the United States grew by 19.2%, compared to the same month in 2020. This growth has been driven by a number of factors, including the continued preference for contactless shopping, the expansion of e-commerce offerings, and the increasing availability of fast and free shipping.
A recent study by Forrester Research found that 60% of consumers plan to continue shopping online even after the pandemic is over. This suggests that the shift to online shopping is here to stay.
However, today many companies find themselves in a difficult situation, as they are trying to cut back on energy and operational costs. After a significant increase in online shopping during Covid times, the euphoria has disappeared as nowadays consumers are showing more restrained buying behaviour. The main reason for reduced consumer spending is sky-high inflation which reached its peak of 10.6% in October 2022 in EU and June 2022 in US.
There is a lot of pressure for e-commerce companies to stay afloat and in this article, we will discuss how the companies can reduce the cost of logistics, energy use and operational costs.
Streamlining Order Fulfillment Process
One of the ways to reduce logistics costs with fulfillment is by streamlining the order fulfillment process. According to a study by the Council of Supply Chain Management Professionals (CSCMP), the order fulfillment process can account for up to 55% of logistics costs (CSCMP, 2022). Therefore, optimizing the order fulfillment process can help businesses save on logistics costs.
To streamline the order fulfillment process, businesses can use technology solutions such as warehouse management systems (WMS), transportation management systems (TMS), and order management systems (OMS). These systems can help automate processes, improve inventory management, reduce errors, and increase productivity (Azadegan, Dooley & Mollenkopf, 2019). However, instead of using various different systems that lead to inefficiency, companies can use new 3PL companies like Jinn that provide all-in-one services that can support in different ways.
To streamline the order fulfillment process, businesses can use technology solutions such as warehouse management systems (WMS), transportation management systems (TMS), and order management systems (OMS). These systems can help automate processes, improve inventory management, reduce errors, and increase productivity (Azadegan, Dooley & Mollenkopf, 2019). However, instead of using various different systems that lead to inefficiency, companies can use new 3PL companies like Jinn that provide all-in-one services that can support in different ways.
Outsourcing Fulfillment:
Outsourcing fulfillment is a way to reduce logistics costs. Outsourcing fulfillment can help businesses save on labor costs, reduce overhead costs, and improve scalability (Azadegan, Dooley & Mollenkopf, 2019).
When outsourcing fulfillment, businesses should choose a reputable fulfillment provider such as Jinn that can provide high-quality service at a reasonable cost. Additionally, businesses should ensure that the fulfillment provider is able to meet their specific needs, such as inventory management, order processing, and shipping.
Jinn can be your solution in optimising fulfillment processes and help save you money as we will provide:
When outsourcing fulfillment, businesses should choose a reputable fulfillment provider such as Jinn that can provide high-quality service at a reasonable cost. Additionally, businesses should ensure that the fulfillment provider is able to meet their specific needs, such as inventory management, order processing, and shipping.
Jinn can be your solution in optimising fulfillment processes and help save you money as we will provide:
- Fulfillment center that is close to your customers. This will reduce the amount of time it takes to ship orders, which can save you money on shipping costs.
- Fulfillment center that has a high level of automation. This can help you to reduce the number of manual tasks that need to be performed, which can save you money on labor costs.
- The tools that you don't have the resources to do in-house. This can help you to save money on labor costs without sacrificing the quality of fulfillment process.
- Provide favourable pricing based on pay as you use approach. This will help you to get the best possible price on the market.
- Provide high level of flexibility, visibility and projections of fulfillment costs.
Implementing Lean Logistics
Another way to reduce logistics costs with fulfillment is by implementing lean logistics. Lean logistics is an approach that focuses on eliminating waste and improving efficiency in the logistics process. This approach can help businesses reduce transportation costs, inventory costs, and labor costs (Barnes & Liao, 2019).
To implement lean logistics, businesses can use tools such as value stream mapping (VSM), kaizen events, and just-in-time (JIT) inventory management. These tools can help identify inefficiencies in the logistics process and provide solutions to eliminate waste (Barnes & Liao, 2019).
With Jinn you can mitigate some in-house warehousing and inventory risks. Keeping inventory in-house you need to tie up high resources and capital for a long time. This can affect the way and how fast you can scale your business, especially in turbulent times like now. With Jinn you reduce the risk of having too large warehouse for your inventory, you can utilise pay as you use approach, reduce fixed costs and release your capital in other areas of your business.
To implement lean logistics, businesses can use tools such as value stream mapping (VSM), kaizen events, and just-in-time (JIT) inventory management. These tools can help identify inefficiencies in the logistics process and provide solutions to eliminate waste (Barnes & Liao, 2019).
With Jinn you can mitigate some in-house warehousing and inventory risks. Keeping inventory in-house you need to tie up high resources and capital for a long time. This can affect the way and how fast you can scale your business, especially in turbulent times like now. With Jinn you reduce the risk of having too large warehouse for your inventory, you can utilise pay as you use approach, reduce fixed costs and release your capital in other areas of your business.
Optimizing Transportation
Optimizing transportation is another way to reduce logistics costs with fulfillment. Transportation costs can account for a significant portion of logistics costs, so finding ways to optimize transportation can lead to significant cost savings (CSCMP, 2022).
To optimize transportation, businesses can use strategies such as route optimization, mode selection, and carrier selection. These strategies can help reduce transportation costs by minimizing miles traveled, choosing the most cost-effective transportation mode, and selecting the most efficient carrier (CSCMP, 2022).
Usually, it takes a lot of time to choose the right shipping carrier. There are many different shipping carriers available, and each one has its own rates and services. Also, keep in mind that you will need to negotiate with your shipping carriers. Once you've found a few shipping carriers that you're interested in working with, you will need to negotiate with them to get the best rates possible. After that you will need to optimize your shipping and delivery methods. There are many different ways to ship and deliver products. You will need to consider using different methods for different types of products and different customers. For example, you might use expedited shipping for high-value items and standard shipping for low-value items.
In order to save time and concentrate on other business aspects you can consider using a third-party logistics (3PL) provider such as Jinn. Jinn provides services that can help you with all aspects of your logistics, from warehousing and picking to shipping and delivery. Furthermore, with Jinn you can:
- Select different delivery options
- Get access to a network of pickup points
- Use efficient packaging
- Simple and accessible order tracking
- Automated shipping label printing
- Automated preparation of all shipment documentation
To optimize transportation, businesses can use strategies such as route optimization, mode selection, and carrier selection. These strategies can help reduce transportation costs by minimizing miles traveled, choosing the most cost-effective transportation mode, and selecting the most efficient carrier (CSCMP, 2022).
Usually, it takes a lot of time to choose the right shipping carrier. There are many different shipping carriers available, and each one has its own rates and services. Also, keep in mind that you will need to negotiate with your shipping carriers. Once you've found a few shipping carriers that you're interested in working with, you will need to negotiate with them to get the best rates possible. After that you will need to optimize your shipping and delivery methods. There are many different ways to ship and deliver products. You will need to consider using different methods for different types of products and different customers. For example, you might use expedited shipping for high-value items and standard shipping for low-value items.
In order to save time and concentrate on other business aspects you can consider using a third-party logistics (3PL) provider such as Jinn. Jinn provides services that can help you with all aspects of your logistics, from warehousing and picking to shipping and delivery. Furthermore, with Jinn you can:
- Select different delivery options
- Get access to a network of pickup points
- Use efficient packaging
- Simple and accessible order tracking
- Automated shipping label printing
- Automated preparation of all shipment documentation
In conclusion, reducing logistics costs with fulfillment is critical for businesses to remain competitive and profitable. By streamlining the order fulfillment process, implementing lean logistics, optimizing transportation, and outsourcing fulfillment, businesses can reduce logistics costs and improve their bottom line. For more information about how Jinn can help you to reduce logistics and warehousing costs click here or contact us for a quote.
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