Cost Category Logistics: A key aspect of reducing costs in the long term is choosing the right service provider

Cost Category Logistics: A key aspect of reducing costs in the long term is choosing the right service provider – service provider and client should be compatible in terms of corporate structure and culture
 
The logistics industry is an essential cornerstone of the European economy. In Europe as a whole the transport sector employs ten million people and produces an annual turnover of 1.000 billion euros. Almost every business uses logistical services in one way or another. Cost Savings Today shows how companies in this sector can position themselves better and save money effectively.
 
Logistics as a process
 
The term logistics involves more than just transport. It is a process that consists of planning, execution and control of the entire flow of goods and the associated flow of information and IT. This mainly includes transport, handling, storage plus picking and packing.
 
Biggest savings potential by analysing the logistics concept
 
The simplest way for businesses to achieve cost reductions is through market analyses and negotiations with their current service providers. However, an analysis of their current logistics concept provides far greater potential. As such, a detailed analysis is carried out on existing procedures, responsibilities and parameters such as quality standards and the costs they incur. However, small and medium-sized businesses usually lack the staff and the necessary expertise to develop these concepts. A company, its environment and risks are constantly changing, which is why services in the logistics sector should also be adjusted at regular intervals.
 
The secret of success: choosing the right service provider
 
A key aspect of reducing costs in the long term is choosing the right service provider. It is important that the service provider and client are compatible in terms of corporate structure and culture. For smaller companies with few standardised procedures there is often a need for greater flexibility. Small companies also benefit when they can communicate with the service provider eye to eye rather than being just any arbitrary customer. Large companies on the other hand often require a financially sound partner, who can undertake investments for the client and meet the stipulated requirements in terms of procedures, documentation and IT connectivity. Therefore, when choosing a service provider, apart from the cost aspect, care should also be taken that they can work together smoothly.
 
Identifying resistance and avoiding it in good time
 
Any change initially produces uncertainty for most of those affected by it. Which is why it is important to get staff involved in the process as soon as possible and communicate it to them clearly. Those affected by the change process should be turned into participants in it. This will also mean it is their project and they will become more willing to collaborate on producing innovations. If employees are excluded or ignored, this often leads to obstructive attitudes, parallel project handling, the withholding of information, compartmentalised thinking and unjustified criticism of established solutions. The result is usually the second or third best solution is adopted. Sometimes projects also fail due to internal resistance. The fact that employees play an outstanding role in the success of cost reduction programmes is also a key feature of the pan-European Sustainability of Cost Reduction Processes study by Expense Reduction Analysts and the EBS Business School.
 
Making logistics costs transparent
 
To find the right service provider in a tendering process, it is first of all essential to make the current costs and requirements transparent. Important aspects are a detailed analysis of existing requirements, responsibilities, procedures and agreements with outside contractors. In addition, the actual needs should be determined and cross-checked against purchased services. Experience shows that this analysis can often be conducted more objectively by an external third party. The main reason for this is that external experts are less involved in company policy and therefore less susceptible to influence.