How to Optimize Your LSP Operations—Your Questions, Answered

Logistics service providers (LSPs) face a very competitive marketplace, with multiple businesses bidding to store, transport and manage goods through an increasingly global supply chain. LSPs need to streamline their operations to bring down costs, improve accuracy, reduce waste and deliver the services that their customers are looking for.  

We know you have questions about how to enhance your supply chain and LSP operations, and we have useful, practical answers. We’ll help you optimize processes and make your business more attractive to potential customers. 

How can I better understand the costs of my logistics operations? 

The secret to providing more competitive pricing and attracting more business is to have an accurate understanding of exactly how much it costs to provide logistics services. You will need to: 

• Establish all of the end-to-end processes and steps involved in delivering a specific logistics service 
• Put measures in place for each of those steps and processes 
• Attach a cost to each step, both an ideal, benchmark cost, and actual costs that you measure over a specific period 
• Figure in all your costs including staff salaries, support costs, software, hardware, fleet, logistics equipment, other third parties and operational expenses 
• Track these processes over time and audit the results to ensure your costs are accurate 
• Create a complete, end-to-end cost for each service you deliver 

Once you have this insight, you can build it into your LSP pricing model. Remember to review and audit your pricing regularly, as inefficiencies and extra steps in your processes can easily add hidden costs.  

I want to streamline logistics operations and reduce waste, where do I start? 

We recommend using your logistics cost analysis as a helpful starting point. Hopefully, you’ve already mapped your logistics processes and attached a price to each one, now it’s time to dig a little deeper. You will need to review each of the processes and steps, looking specifically for issues. For example: 

• Delays in the handoff of goods between your LSP and a supplier, manufacturer or end customer 
• Delays in the transport of goods between locations 
• Items going missing in transit or in your warehouse, or goods arriving late at the destination 
• Unusual staff turnover or other problematic activities, like a high incidence of sickness or lateness 
• Unusual costs that can’t be traced to a predictable increase in expenditure 
• Areas where you’ve had to duplicate effort or rework a process 
• Poor customer service delivery to an end customer 

Each of these is an issue that can be traced back to a root cause. For each logistics issue, establish how important it is that you fix that issue, based on the costs to your business, the impact on your customer and how frequently the issue occurs. Once you have a prioritized list, go through each logistics issue in turn and look for the underlying root cause, by asking “what caused this to go wrong?” 

Once the cause is identified, you can start to put fixes in place and measure how effective your changes have been, Repeat this for all of your important logistics issues, and you’ll start to reduce waste and enhance operations across the whole business. 

Can I Predict Supply, Demand and Capacity Across My Logistics Business? 

Logistics is a very delicate balancing act of supply and demand—ensuring you have enough equipment, storage space, vehicles and staff on hand to meet customer demands while planning for future expansion. The long lead times associated with adding capacity don’t help, either. 

Fortunately, you can use trend analysis, combined with predictive analytics, AI and machine learning to forecast what your future demands are likely to be. When you’re planning for capacity, be sure to build in the following: 

• Your existing customer base and their demands on your logistics business 
• The storage space you have in place now and any new warehouses that will become available over the forecast period 
• The age and reliability of your logistics equipment and your transportation fleet 
• The capacity of your transportation fleet 
• The size and turnover of your workforce, especially those in critical or hard-to-fill positions 

You can build all of these factors and more into AI models that can generate various scenarios for likely future demand. Once you have the outputs from these models, you can sense-check them and start your contingency and capacity planning. 

How Can I Enhance Information Exchange and Communications through the Logistics Supply Chain? 

A smoothly-running logistics supply chain relies as much on the rapid transfer of information as it does getting physical goods between locations. The easiest way to achieve good communications between parties is to move to a centralized platform that integrates with the systems, software and hardware that’s used by your partners in the supply chain. We recommend that you: 

• Choose a centralized logistics management platform that can handle your day-to-day operations, asset management, cost control and other aspects of your LSP 
• Work with your partners to encourage them to move onto a centralized platform to enhance data transfer 
• Ensure the platform you use can integrate with other supply chain and logistics systems 
• Create reports and dashboards that show “one view of the truth” so you always have the most up-to-date information on how your LSP is performing 
• Build a suite of communications processes so you’re always keeping customers, partners and third parties informed of the status of logistics and goods as they move through the supply chain 

What Are Some Common Problem Areas I can Focus On to Enhance My Logistics Operations? 

Although we’ve covered several of the major challenges for LSPs above, there are definitely other areas that can benefit from measurement, analysis, improvement and optimization: 

• The handoff of raw materials, parts and products between parties and ensuring the safe transition of ownership 
• The tracking of vehicles and shipments by using GPS locations and IoT devices 
• The impact of seasonal trends on logistics provision, especially in the retail environment 
• Regulatory and compliance issues, especially as supply chains become more global 
• Factoring in tariffs and other trade barriers and their impact on the free flow of goods 
• Refocusing your supply chain to make it more customer-centric 

Wherever you are in your LSP operations, our learning center makes it easy for you to take the next step, and the Blume Global platform gives you the power you need to revolutionize how you do business.  

Blume Logistics creates a robust network for logistics tendering, tracking, event capture, POD verification and settlement initiation. By connecting a global ecosystem of multi-modal carriers to manage every move, Blume Logistics unites carriers—from ocean to rail to long haul—with first- and last-mile drayage for real-time event and cost tracking.