Consistently reducing and optimizing costs without increasing logistics risk can only be achieved by intelligently combining industry-specific analytics frameworks, the right technology tools and logistics processes engineered for effectiveness as well as greater efficiency.
2. Analytics
Leveraging analytics frameworks for analyzing cost performance is a powerful driver for lowering overall costs. Network design analysis, route/mode selection, and logistics spend analysis are a few of the areas where analytics can be leveraged. For businesses to be most effective, they should use tools that can simulate different scenarios of various parameters such as lanes, routes, infrastructure constraints, customs clearance practices, logistics modes and asset utilization. With this data in hand, the logistics organization can better understand the impact of costs from various combinations and design their networks accordingly.
A number of tools are currently available to analyze costs, including network optimization, carrier sourcing and freight lane analysis. Selection of a logistics analytics tool should be based on: 1) its ability to rapidly study various “what if” scenarios in order to make processes more effective in achieving the business outcomes of cost, and 2) its ability to identify risks and assess the cost impact of such risks on logistics networks.
For instance, one chemical manufacturer created and analyzed multiple scenarios for distribution centers, an optimization effort that generated savings of 17 percent. Another manufacturer leveraged analysis to identify recoverable costs from suppliers, then set up detailed reports and dashboards to increase visibility into various logistics costs components.
