Logistics for Startups: 6 of the Best Logistics Tips for Startups
You have an amazing product that is set to change the world. Your website is all set up, and you’ve found a target audience. You even have some money to get yourself started and launch your company. You have almost everything your startup needs— except for a process for getting your raw materials and finished products from Point A to Point B.
That’s where logistics comes in. Whether your startup is large or small, if you sell products, you’ll need to create a logistics process as quickly as possible.
Not sure where to start or even what a logistics process really is?
Keep reading to discover some valuable logistics tips for startups.
What Is Logistics?
Let’s start by clearly defining “logistics.”
In short, your logistics process is how your company transports raw materials, product components and finished products between your suppliers, warehouse, distributors and customers. It’s similar to the supply chain but slightly different. Logistics refers simply to the movement of products while the supply chain includes that movement plus sourcing, supplier relationship management, cost of goods management and many other factors.
Developing an effective logistics process early on improves efficiency and cost-effectiveness in your business. Here are a few tips to get you started.
Understand Your Objectives
Before you can implement a plan, you need to have a clear picture of your startup’s overall objectives. If your ultimate goal is to offer the fastest delivery time in your industry, for example, your logistics process will be different from what it would be if your objective is to keep your costs as low as possible.
Take the time to figure out exactly what your company wants to accomplish before you go any further in creating your logistics process. Also, think about any problems your startup may face.
Do you require raw materials that are costly or difficult to obtain due to hazmat shipping regulations?
Are your finished products fragile?
Do they contain things like lithium-ion batteries that have strict shipping requirements?
All of these things could have an impact on your final logistics process.
Consider your Customers
Even if your company’s primary objective is to make shipping as cheap and efficient as possible, you still need to take your customers’ needs into consideration. While consumers usually want to get their orders as quickly as possible, they value other things as well. Most appreciate when businesses send shipping updates and tracking information and providing this sort of communication doesn’t add a lot of cost to your logistics plan. By providing valued services like this, you can make your company more appealing to consumers without driving up your costs.
You should also think about what your customers expect when ordering your product. They expect the product to show up in good condition and within a reasonable timeframe. Depending on your brand and marketing strategy, they may also expect your packages to have a certain appearance or for their purchase to be packaged in a certain manner. Failing to meet these expectations could have a negative impact on your bottom line, so it is always important to consider your customers when creating a logistics process.
Obtain Competitive Quotes
It may seem obvious, but many business owners get so caught up on trying to get their startups up and running as quickly as possible that they fail to do basic things like getting quotes from multiple carriers. When working on developing your logistics process, let carriers know that you are obtaining quotes from multiple companies to ensure that they give you the best possible price. Before settling on a carrier, be sure to get quotes from at least three companies, if possible.
Keep Track of Costs
If you don’t know exactly how you are spending your money, it’s impossible to effectively budget for logistics. Everything from your custom cardboard boxes and packing materials to taxes and shipping charges must be documented. Pay attention to exactly how much you are spending throughout the entire process. When you understand exactly where your money is going, you can take steps to reduce your costs and develop a more cost-effective logistics process.
Plan, Plan, Plan
A good logistics process relies on your ability to plan both demand and production. Demand planning ensures that you will understand your customers’ needs, and production planning means you’ll know exactly how much time it takes to obtain raw materials, manufacture your product and ship it to a customer.
Careful planning allows you to account for slow delivery from faraway suppliers. This is especially important if you need to obtain supplies from places like China and don’t want to spend extra money on air freight and expedited shipping fees. Planning ahead means that you will be able to obtain everything you need at a price you can afford while keeping up with customer demand.
Consider Working with a Third-Party Logistics Company
Developing a logistics process is no easy task. By working with a third-party logistics company, or 3PL, however, much of the hard work falls on someone who is an expert. Working with a good 3PL helps ensure that your startup gets the fastest deliveries and the best rates. It also gives you access to a productive warehouse team and the tools necessary to successfully source materials and ship finished products across town or around the world.
When you have an amazing product and you are eager to show it to the world, it’s sometimes easy to overlook the importance of planning exactly how you will get it to your customer’s doorstep. It’s also easy to forget that the process that worked for obtaining the materials you needed to create prototypes and manufacture a limited run of products may not work so well as your company expands.
By taking the tips above into consideration, you can develop an organized and efficient logistics process that is beneficial to both you and your customers. From saving your money to keeping consumers in your target audience happy, an effective logistics process is one of the key elements of any successful startup.