For those in the service business with a clearly local flair, this may not be an issue. Unless, of course, you plan to expand your business by opening up new markets. Maybe your business lends itself to capitalizing on the advancements in technology and services provided by a efficient logistics company. Do you have or plan to have existing or potential clients send you goods or materials to analyze, repair, duplicate, or some other service and then you return it to them. For others, it may entail full 40 foot container loads of goods.
In today’s marketplace, you really have to look at the size and weight of the shipments combined with frequency and whether international is a factor today or will be in the future. So let’s begin with a discussion about shipping smaller lighter items. This is a market once controlled by the US Postal Service until FEDEX used bar code technology and standard packaging sizes to develop a system to meet the more time sensitive needs of business. They wanted both a system that would be user efficient but one that could handle very high volumes. We could digress and discuss their philosophy but while several have tried to compete with them, it really has come down to two, FEDEX and UPS. There are strengths and weakness of each but the basic principles apply. Initially they just wanted to be your shipping company and now they want to be your logistics solution. To compare the two we would need a specific examples and that would defeat the purpose of this to provide insight to a wide range of business about ways to enhance their business via a logistics solution. TIP: Both firms have relationships with organizations that have discount arrangements that can be significant and in excess of the annual cost of membership. What kind of impact would it have if you could be delivering goods or services physically by 10 am the next day. In major cities you only have to get it to certain locations by 8 PM. When a day or so is not a factor then you really can see competitive pricing as even the US Postal Service enters into it with one price boxes for anywhere in US. Again you have to price compare and match it to your shipping objectives.
If you plan is for quick turnaround and you are dealing with items and services where a $10 difference in shipping is not significant or it is option at customer expense, it can change your markets and possibly even your services. Technological advances in communication now make it easier, faster and more reliable to keep track of shipping status from a smart phone and on a close to real time basis. With a little discussion and planning, you might be able to arrange all this to integrated right into your QuickBooks (or other accounting software) and/or Outlook thereby minimizing typing each label and address. Think about how it works on eBay.
So begin by asking yourself these questions:
- Does my business lend itself to capitalizing on this technology? Can I gain a competitive edge in my target market from better logistics? Can it be additional revenue with various choices for the client?
- What are my margins? What are the costs? How much are the fixed or more likely setup costs? How much will it be on a per item basis to ship? What is my break-even point if I were to add this logistically system? Is it offset in whole or in part the time and effort savings of my employees? They are good at what they do and mistakes are rare indeed.
- Where is my market? Would this allow me to redefine my market? How does my competition handle it?
Many different options and factors enter into a decision of this type of decision. No one thing jumps out as the key. As we talked about last time, you need to evaluate in depth your people resource dedicated to logistics? What are your options and the associated costs and savings? Where do you plan to be in 3 years? Globally? Logistics and technology lead the way in that arena and provide tremendous cost savings. Consider that the marketplace is globalizing, competition will escalate, market boundaries will expand while costs are attacked making quality of service more of a challenge and an opportunity for separation in the marketplace. Savvy business planning ahead, constantly challenging themselves to be proactively efficient and staying up with the technology will have an upper hand in the battle.
There are a whole myriad of choices for that business shipping the smaller items. This can apply on items up to a size that is say, lifted easily by your customer. International markets have stabilized and logistics service has become readily available and affordable. Once into the international market, you see a whole new slate of challenges issues that need to be addressed from who is best provider, import restrictions or duties, in-country competition, political status of the country and its stability. Additionally, once you move to larger items, say pallet loads or container loads, you need customized service and solutions that are geared toward that arena. Generic solutions are less likely to be applicable when you are shipping larger and/or heavier items as with the size comes higher costs that ripple through all areas.
So what do you look for? Do you have experience in this market? With these service providers, I mean freight forwarders? Customs Brokers? Transport Companies? Are you aware of the new advanced reporting requirements for materials coming into US? Are you shipping material that may be classified as hazardous? Or it might be hazardous for air but not via ship? Just a few of the questions that leap out at you when you talk about bigger items.