Small businesses often grapple with unique challenges when it comes to managing freight. Limited budgets, manpower, bargaining power, and poor supply chain visibility can impact the ability to optimise freight operations.
Freight costs surged during the COVID pandemic and have remained high. They are one of the most significant, if not the most significant, expenses for Australian SMEs, particularly those in regional areas. However, practical and cost-effective solutions are available to help small businesses overcome these challenges and enhance their logistics efficiency.
The following tips can help level the playing field for SMEs regarding freight and logistics:
Diversifying transportation modes
Exploring alternative solutions, such as intermodal transportation, can offer cost-effective solutions. Utilising trucks, trains and ships in combination can result in more efficient and economical freight operations than sticking with one for the entire journey.
Collaboration with freight partners
Establishing long-term partnerships with reliable freight providers can result in better rates, priority service and access to value-added services like warehousing and reverse logistics. Joining industry associations or networks that facilitate collaboration can provide opportunities for consolidation, best practice sharing and collective negotiations with carriers.
Outsourcing to Third-Party Logistics (3PL) providers
It’s worth considering outsourcing certain aspects of supply chain logistics to 3PL providers, benefiting from their expertise, infrastructure and technology. Outsourcing allows businesses to focus on core competencies while improving efficiency and cost-effectiveness.
Pooling resources with shipping services
Small businesses can benefit from consolidated shipping services, allowing them to collectively share transportation space and negotiate better rates. By pooling shipments, businesses achieve economies of scale, enabling them to optimise costs and enhance bargaining power with carriers.
Harnessing technology platforms
Technology platforms can connect small businesses directly with carriers, offering real-time tracking, rate comparison, and efficient shipment booking. Freight management systems (FMS) automate processes, saving time, improving accuracy, and reducing human errors in carrier selection and rate negotiations.
Data analytics for informed decision-making
Data analytics tools enable businesses to analyse historical shipment data, identify trends, and make informed decisions about carrier selection, route optimisation, and inventory management.
Efficient inventory management strategies
Adopting just-in-time (JIT) inventory management minimises storage costs and reduces the risk of obsolescence by ordering and receiving goods as needed. Implementing barcode scanning and RFID technology enhances inventory accuracy, preventing stockouts, overstocking, and streamlining order fulfillment processes.
Freight efficiencies not only benefit small businesses, but they also benefit society more broadly. 30 per cent of the trucks, trains, ships and planes crisscrossing our nation are empty. Ensuring they are full at each leg of their journey not only brings down costs but also dramatically reduces the environmental impact. Small businesses can successfully navigate freight challenges by implementing these strategies and leveraging technology. From consolidated shipping services to efficient inventory management and collaboration with freight partners, these approaches empower small businesses to optimise their supply chain logistics, overcome challenges, and enhance overall efficiency.
