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

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.– 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 –

Gone are the days of making decisions based on “I think…” and “gut-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. Utilising 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. Optimising 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 standardised processes. Process standardisation and EDI helps in improving workflows resulting in increased productivity which in turn generates greater revenue and higher 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 simpler, 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 tremendously in 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.

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