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8 Common Shipping and Logistics Mistakes Small Businesses Make

Shipping and Logistics

Logistics are crucial to the success of your small business. Delays receiving critical inventory, lost deliveries to customers, and avoidable mistakes all cost you more than you can afford. Every one hurts your business relationships and your reputation. However, some shipping and logistical problems are once in a blue moon while others occur with depressing regularity. Here are eight common shipping and logistics mistakes made by small businesses.

Failing to Train Personnel

Don’t put someone unfamiliar with logistics in charge of your logistics operations. In fact, you should have everyone at every level properly trained for each position they work in. If you don’t properly train people, they’ll make mistakes regarding shipping manifests or miss scheduling dates. One split-second mistake mixing up two documents will create serious problems for you, the receiver, or both. This is especially true for small businesses, because each mistake is such a relatively large share of your business. Always train your staff as you transition them into new roles, and develop a staff support system so that everyone is backed up by someone else equally qualified to do their job.

Not Having All of the Information Required

It is amazing how often businesses make blind shipments, where the shipping and receiving companies are unaware of each other. If you don’t have a detailed bill of lading, the lines of communication break down and products are lost. If you don’t know your axle load, you could damage your trucks and delay shipments. Learn more here about the shipping logistics that arise when you’re dealing with trucks and travel trailers.

Guessing as to the Cost

You need to know exactly how much it costs to ship from point A to point B. This is especially true for overseas shipping. When you guess about the cost instead of running the numbers, you could waste money overpaying for shipping. You’ll never get that money back, though it could have gone to the bottom line. If you under-charge for shipping and end up paying more than planned, you’re eating into your profit margin. The cost of this mistake balloons with the size of the lot you’re sending.

One solution is developing a relationship with several reliable shipping companies. Better yet, create contracts with these companies so that they’re dedicated to serving you when you need them. You may even save money due to the volume of products you ship with them.

Another variation of this mistake is estimating today’s shipping costs based on yesterday’s metrics. You could make this mistake simply by assuming costs didn’t go up since last year. Yet the prices can change. It may be due to inflation, increasing fuel costs, a labor shortage, regulatory mandates, higher taxes and a dozen other things that contribute to higher distribution costs. Update your data on what it costs to ship products so you can plan accordingly.

Not Researching International Shipping

International shipping is more prone to error than domestic shipping. This is in part because it is such a complicated process. For example, you can run into problems if you don’t know what to expect from each country’s tax code. You don’t want to be hit with an unexpected bill for foreign taxes and tariffs. A popular option for small businesses is to outsource their international shipping.

Before you contract with a company for overseas shipping, do your research regarding the options. Then send a few non-critical deliveries as a trial run. Do items arrive on time? Did they arrive undamaged? Learn how to check on the status of these deliveries so you can answer customers’ questions as necessary. Understand how their methods compare to what the competition is doing, since shortcuts on their part could lead to returned shipments or legal action against your company. For example, you don’t want to accidentally violate an embargo.

Not Automating

Automation is an important part of logistics and shipping today. It is difficult to keep up with orders and shipments without software tools to aid you in the process. You want automated tools that send clients information on when their order was shipped and the tracking information so that you don’t have to deal with their requests. This type of automation reduces the opportunities for error. The ideal software interfaces with your clients’ or shippers’ databases so that you have total transparency as to the state of operations. Automation can save you money too. For example, automating waybills eliminates the cost many shippers charge to process paper waybills.

Not Paying Attention to the Competition

Shipping and logistics are constantly changing. Technology is evolving, but that’s not the only thing that is. Everyone is coming up with faster, better ways to ship things. Fail to keep up, and you could end up wasting money. Or you could start to look obsolete compared to the competition. The solution is to keep up with logistics and shipping market trends, deciding when to upgrade your methods when it suits your schedule. Big name carriers spend up to a billion dollars a year upgrading and buying new technology. What they’re installing is probably what you need to do, too.

Not Choosing the Most Cost-Effective Service Level

Too many people choose the fastest shipping option, regardless of price, because they think this is equal to customer service. It might be, but it is very expensive. By comparing your options based on cost-effectiveness, you can find options that cost a lot less but don’t hurt your performance metrics. For example, switching from guaranteed morning deliveries to next day service dramatically cuts costs with almost no change in service level. For relatively close deliveries, switching from air to ground delivery significantly cuts costs but the shipment arrives almost as quickly.

Not Learning from Your Mistakes

Every small business will make mistakes in logistics. One of their biggest mistakes is not trying to learn from those mistakes. How could you change your processes to minimize the chance of the same mistake happening again? How can you alter your workflow to minimize the room for human error? And do everything you can to learn from the mistakes of others, since it is less costly than making the same mistakes yourself.

There are a lot of mistakes that can be made when moving products from place to place, but when you know the most common ones that arise, you can avoid making them yourself. Then you can save your company money and protect your reputation with your customers.

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