Logistic costs make up a major part of total costs in many companies. Consequently, reducing transportation costs is high on the agenda of supply chain managers, a difficult challenge in today's turbulent business environment. Increasingly demanding customers, growing environmental awareness and a focus on total cost reduction further complicate this task, as well as emphasize the importance of efficient logistics. Here are 5 tips and tricks on how to improve logistic performance.

1. Avoid rules of thumb

In modern society, transportation planners are facing a massive amount of choices. Freight either can be delivered directly to the end-customer or stop in an intermediate hub for consolidation. Routes can be performed by internally owned trucks or by different external parties, who often use different pricing structures. Furthermore multiple modes of transportation, e.g. rail, air, road and waterways, need to be considered. Meanwhile customer, environmental and lead time requirements need to be respected. In this highly complex environment, planners often rely on rules of thumbs. However, rules of thumb produce suboptimal solutions and cost companies a lot of money. A better approach for transport planning is to use advanced planning tools that take into account all constraints and choices, whilst safeguarding service levels.

2. Intermodal transport

Recent trends in trade and economy, such as globalization and internationalization, have largely changed the requirements for supply chains. In response to the increased flexibility required by these trends, companies integrate multiple transport modes to ship their merchandize and commodities.

Intermodal transport - the combination of rail, ship, truck and air - allows companies to find the most efficient way to meet location, infrastructure and lead time requirements. Moreover it allows them to reduce their carbon foot print, as the energy intensity and carbon-emission profile of each of the transport modes can be taken into consideration. Another advantage concerns shifting traffic from roads to more sustainable modes, scaling down road congestions and saving both time and money.

3. Adaptive routing: one size does not fit it all

Many industries are characterized by a highly dynamic environment. Hence, the logistic solution used by these companies should be able to cope with this dynamics and to respond to last minute changes. In this regard, adaptive routing comes in handy. It ensures that a company's system is capable of changing the routes dynamically in response to a change in conditions.

Adaptive routing is often implemented in different stages. In a first step, using different routes on different days often suffice to obtain the first benefits. In more mature environments, routes are alternated during the day, based on real-time trafic data, special events etc. 

4. High data quality

Data is a key ingredient of successful supply chains. The principle of Garbage In - Garbage Out applies more then ever. And details matter. Successful analyses and recommendations can only be built on models that use high-quality data.  The more accurate the information available, the more accurate the model, and the better the results. 

5. Use Real time information

Real time visibilty ensures real savings. To be able to ensure high quality in data, real time logistics plays an important role. Traffic data and freight tracking allows companies to improve their customer service and to make better business solutions.