Most B2B players have already improved their ability to minimize logistics costs on a route-by-route level. They know how to find the least expensive route for shipping products from a given production facility to an individual client location.
However, few have a holistic view of their logistics network or of the associated costs. Such a view considers all supplier and customer flows simultaneously. It tracks not only transportation and handling but also warehousing and inventory working-capital costs, specifically by end customer. Without such a picture, companies might miss opportunities to capture greater value from their network.
The incomplete view that most companies have of their transportation costs is the result of a siloed organization structure that has each part of the business focusing on a single aspect of logistics. For example, one part of the business might be responsible for shipping from plants to warehouses. Another might manage allocation of customers to specific production facilities. A third might be in charge of negotiating rates with carriers.
Some organizations segment supply chain management by customer or channel and duplicate network structures. And in many cases, inbound-logistics management is separate from outbound—or simply not directly managed—creating major backhaul inefficiencies, particularly in remote areas. Managers in each part of the business strive (understandably) to optimize logistics costs for their own silos but might not factor in the interdependencies. They might not even be aware that their decisions could result in higher costs for other parts of the business.
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