Transportation is a necessary part of getting products to your customers. Taking the time to properly lay out your budget can make all the difference. If you can keep your costs low, you can pass those savings on to your own customers, who will continue to choose you over the competition. But there are so many variables involved, it can be tough to manage those costs on a daily basis.
The new year brings an opportunity to take a look at those costs and make changes that can cut them. As you sit down to plan your budget, here are a few things to consider.
Evaluate Your Needs
You have your own products, timelines, and your own shipping needs. Comparing what you do to others in your industry is not necessarily a bad thing, but it can at times lead you down the wrong road. Your first step as you plan out your year should be to take a look at your current income and the operational costs associated with it. There are usually ways to combine loads or shorten routes to make sure each shipment gets from Point A to Point B in as efficient a manner as possible.
Weigh All Factors
Many companies make the mistake of going with the cheapest option possible. One carrier may offer a cheaper per-truckload rate, but there may be a reason for that. It is important to make sure you are not only getting the best deal, but you are reducing risk as you line up shipments for your customers. If a shipment arrives damaged, you or your customer will lose more money than you will have saved by going with the cheaper option.
Without a clear and concise budget, many companies often end up with unpleasant surprises during the year. It could be a natural disaster impacting a large section of the country, or it could simply be an accident that damages the inventory being delivered. If you put some cushion in your budget for these unexpected emergencies, you’ll be able to stay within your spending limitations and avoid a bit of panic when surprises happen.
Take Advantage of Technology
Many companies within the transportation industry use the latest software to plan and manage shipments for their customers. This software can help to provide the most efficient route for all of your deliveries, consolidating truckloads to get the most out of each mile. This should be a big consideration when choosing your carrier or third party logistics solution because you could be missing out on new efficiencies with those that do not consider these technologies.
Monitor and Reassess
One mistake many businesses make is in only getting serious about their budget once a year. Once a budget is in place, you should regularly monitor how your business’s finances are doing. This will allow you to identify small issues right away, rather than letting them grow into big financial problems.
With each new year, your business has the opportunity to look for ways to operate more efficiently. As you cut costs and learn to really plan out your transportation budget, you will begin to see that your expenses decrease and your net income increases. You will not only be putting less of the money you make toward expenses, but you will also find that you are better serving your own customers, leading to greater overall satisfaction.