Driving Profitability in Logistics
We expect all our businesses to
have a positive impact on our top and bottom lines. Profitability is very important to
us or we wouldn't be in this business. - Jeff Bezos, Founder & CEO,
Amazon.com
As very rightly put,
Profitability is the primary goal of all business ventures. Without
profitability the business will not survive in the long run and so driving
profitability is very important.
Theoretically, increasing
profitability is very simple – All one must do is Increase the Revenue and
Reduce the Expenditures – thus, achieving the perfect end result. Practically
though, it is one of the toughest challenge to increase revenue and cut down
expenses.
For logistics companies
profitability has always been a difficult challenge. Despite increasing
revenues, only a small number of logistics services providers can achieve
growth in profitability. It means that logistics companies, in order to grow
their business profitability, must look beyond traditional ways and pursue
fundamental change. Effective usage of logistics management software at each
critical juncture of business successfully drives the profitability
north-wards. Let us see how –
1.
Power of Information
Days are the gone of making
decisions based on “I think...” and “good-feelings”. Making informed decisions
based on facts is today’s best practice. By putting the available information
to good use, logistics companies can achieve great results. Utilizing the data
generated with logistics and freight forwarding software to create reports and
dashboards helps in informed decision making. Improving the time and quality of
decision making results in simplifying operations and avoiding barriers. A
simple activity such as choosing a shipper can have its effect on
profitability. Logistics companies can make use of automatic alerts &
notifications to improve the speed of response and avoid negative business
impact. Reports, KPIs,
Dashboards- all help in
strategic, tactical as well as operational decision making. Optimizing the
operations to work in tandem with each other increases the efficiency which has
positive effects on the profitability of the business.*
2.
Business Optimization to Cut Costs
Freight forwarding and
logistics companies can use advance software that can integrate their entire
business functions and help in creating standardized processes. Process
standardization and EDI helps in improving workflows which increases
productivity which in turn generates greater revenue and increase profit
margins. Closely integrated operations also reduce the errors in documentation
and efforts in repeated data entry which allows logistics companies to focus on
more fruitful business activities such as customer service.
3. Stop Revenue Leakage
Identifying the avenues to stop
revenue leakage is the most important way of improving profitability. ERP
Software empowers logistics companies with powerful accounting and billing
applications to effectively integrate financial accounting with operations. The
integration of operations with accounts is exceedingly important to improve
cash-flows, reduce costs and control revenue leakages. For e.g. Sales team can
set the alert for raising an invoice to a customer for a particular job. As per
the alert, billing team can raise the invoice and set the alerts for follow-ups
based on the credit period of the customer. This will help in minimizing the
period of receiving the payment eliminating the delays in sending the invoice
or the chances of extending the credit period due to lack of communication.
4.
Improve Customer Loyalty
It is always simple, easier and
more logical to get repeat business from existing and satisfied customers as
compared to finding new customers. Existing customers also prove to be more
profitable as businesses save on cost, time and efforts of finding new
customers. Thus, improving customer loyalty is of utmost importance to drive
higher profitability. Logistics software helps in improving customer loyalty by
providing multiple opportunities to improve customer satisfaction.
- Customer Service : Address your customers quickly and more
efficiently to improve customer satisfaction
- Visibility : Provide automated and real-time shipment or cargo
tracking
- Communication : Use alerts and notifications to provide quick,
accurate and timely updates to customers
5.
Effective use of CRM
CRM software for logistics
companies can be used for improving the efficiency of sales and marketing by
driving the business acquisition and customer satisfaction strategies.
Logistics software can help in planning strategies based on KYC information
available in CRM which helps in tremendously increasing the effectiveness of
marketing efforts.
Profitability is an elusive
target and requires focused efforts embedded into the strategy of the logistics
company. Productive use of logistics ERP helps in fine-tuning the operational
procedures to eliminate factors that pull down the profitability. Software for
logistics companies also supports the efforts that push the profits higher.