What about physical locations?
After analyzing your customers’ buying patterns, consider where your clients are located. This analysis will help you determine the fastest and cheapest way to ship your products.
As part of this process, consider your warehouse location. Where is it in relation to your customers? The farther the warehouse is from your clients, the more it’s going to cost to ship your products to them. Business owners should also consider that the farther your warehouse is from your clients, the more opportunity there is for a costly mistake to happen between the moment goods are shipped and the moment they arrive at their destination.
For example, if you’re located in Georgia and most of your customers are on the West Coast, it might be cost-effective to relocate your warehouse to a more centralized region, such as the Midwest. This new location can reduce shipping charges and speed up delivery time.
What about freight charges?
Even if you don’t move your warehouse, you can still find ways to save on shipping charges. Use the analysis of your customer base to determine the areas where you ship most frequently. This information may help you qualify for a discount shipping program.
Analyze the different carriers you are using. If you can reduce the number of different shippers, you may be able to negotiate lower rates. A number of our clients have been able to significantly reduce their shipping costs by working with an outside consultant to obtain bulk shipping discounts.
After selecting a shipper, make sure the company is providing the service you expect by periodically reviewing its performance. To do this, create a checklist noting information such as the total number of shipments and the percentage of shipments delivered on time.
Should companies look at outsourcing?
If your budget or staff is limited, consider using a third-party logistics provider. These companies can handle your inbound and outbound transportation, as well as warehousing and bill payment.
They also may be able to offer freight consolidation, which could translate into your shipments gaining priority treatment at receiving docks that handle full-load shipments before partial loads.
Outsourcing the logistics function can free up internal resources and save money. But bear in mind that you’re still responsible for ensuring that your products reach your customers on time and in good condition. For this reason, it’s important to carefully monitor your third-party logistics service.
Richard Kopelman, CPA, is a partner at Habif, Arogeti & Wynne, LLP. Reach him at [email protected] or (404) 898-8236.
