The current market is marked by high competition and this is nothing new. Several companies offer similar products or services, so the quality of the item offered – although indispensable – is not always a decisive factor when choosing a customer.

Increasingly, on-time deliveries, efficient service, reliability and access to technology are examples of aspects that offer a differential and add value to the consumer’s shopping experience.

In this way, we see that logistics has great strategic potential and, when well aligned and structured. It contributes to process optimization, cost reduction and profitability.

Effective logistics and distribution tactics are key to making a company more profitable and operating smarter. To know seven of these techniques, continue reading this article and find out how to improve your company’s profit margin. Check out!

1. Map logistical  Processes:

Firstly, in order to improve logistics and start to profit a lot from it.  It is necessary to organize all stages and operations of the production chain. For this, gather all information about processes, such as storage, delivery schedule, fleet management, among others.

Drawing, step by step, how each logistical procedure of your company works. It  is essential to discover what needs to be corrected, identify bottlenecks, waste and tasks that can be simplified or eliminated.

The aim is, then, to reorganize the entire system and understand what is necessary for it to operate with high efficiency and deliver better than the competition.

2. Focus on customer interests:

Reformulating processes and cutting costs is necessary and, in fact, contributes to the profitability and competitiveness of a company. However, everything must be done with discretion.

Certain changes can save money but have a negative impact on customer service. Thus, quality and customer interests must always be in mind during a logistics improvement project.

Radical spending cuts that do not undergo a careful analysis can, in the short term, improve the profit margin. However, in the long run, they can undermine the company’s reputation and customer satisfaction. Consequently, the institution runs the risk of losing the preference — and thus a good part of its revenue.

3. Improve inventory control:

Inventory is the heart of logistics, as its materials move the distribution chain. Therefore, for success, your control must be rigid. In this context, there are two scenarios that can compromise the operation of the corporation.  Limit its earnings.  Therefore, they must be avoided: the lack and excess of products.

Missing goods represent lost sales opportunities. On the other hand, excess inventory, with materials stranded, means money stopped.  Capital that could be invested and generating dividends for the company is parked in warehouses.

In addition, there is still the risk of inputs spoiling or becoming obsolete, causing an even greater financial loss.

Therefore, we see that the control of the inputs and outputs of the stock must be carried out with precision.

The manager needs to define the exact moment when replenishment is mandatory and also know the quantities that the company already has in the sheds, to prevent unnecessary losses and expenses.

4. Work with demand forecasting:

Analyzing inventory rates and sales volume over a period helps the manager to program himself to meet future requisitions.

It is worth mentioning that the results of this research serve to guide the manager to make better decisions regarding provisioning and to arrive at an approximate value — based on the business experience.

5. Develop a good relationship with suppliers:

Choosing suppliers based on the lowest price can result in an error. The aim is to always aim for the best cost-benefit ratio so that the quality of the product or service offered does not suffer. So customers remain satisfied.

However, to improve the profit margin, a good initiative is to strengthen ties with supplier institutions and establish partnerships. When you invest in a positive and trusting relationship with suppliers, they tend to be more committed and allow more flexible payment and delivery methods, for example.

 

6. Incorporate the logic of continuous improvement:

 

Logistics is a very broad sector and there are many processes involved. Therefore, it is important to keep constant attention and bet on preventive actions to avoid errors, losses and greater waste.

In this way, the manager acts proactively and solves problems comprehensively, without having to resort to palliative measures that, in addition to not solving them, generate more costs. Tips to choose forklift for warehouse

7. Consider hiring a specialized company:

Often, relying on the help of a company that specializes in a subject is more viable, efficient and cheaper than setting up and maintaining a logistics infrastructure. Hire consultancy or logistical services from institutions that have the know-how and have a trained and qualified team to deal with the challenges of the supply chain.

Outsourcing is a smart measure also at seasonal times, when the company receives high demand. On these occasions, it is not always the best option to invest in equipment and hiring. With the help of an experienced partner, the company has the opportunity to position itself more competitively and thus increase profits.

Due to its strategic role, high-performance logistics provide the necessary support for the company to improve its profit margin. So bet on these seven techniques and see how they will help your business to be more profitable!

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