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6 Things Every Startup Needs To Know About Logistics

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You’re a brand new startup with a great product. It could be a small amount of prototypes or the first batch of sellable inventory and now it’s up to you to get them out door into people’s hands. That’s awesome! So how do you actually do that? At this point in your new company’s timeline, it is all about the logistics process. However you plan on moving product, or even raw materials and components, between suppliers, warehouses, and the customers themselves is logistics. It is a complex operation where many hands can become involved in the making of the pie that is your products. Sometimes that is also pie, but we digress. A large chunk of your startup’s success comes down to the efficiency of your logistics process. Let’s use pizza delivery as an example: You (the customer) order a pizza (product) from Generic Pizza Company (business). In the time you wait between ordering and having the pizza delivered, it has to be made. Dough and toppings (raw materials and components) are put together in the kitchen (warehouse) by cooks (employees).

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Once the pizza is made and you chose the delivery option, a delivery driver (shipping method) has to get it to you. However, this driver doesn’t have an infinite amount of time to do that as they said you’d be getting your food in about 45 minutes. If they get it to you early, you’re thrilled and most likely give a great tip (incredibly satisfied customer). If they get it to you on time, you’re happy you got what you expected (satisfied customer). If the driver is late, you’re annoyed and frustrated (unsatisfied customer). Finally, if they’re incredibly late or your pizza never comes, you are upset and angry (incredibly unsatisfied customer and lost future business). This is a logistics process at its most basic. Customer orders something from company, company fulfills customer’s order, and the speed, cost, and condition that product arrives in influences the customer the next time the purchase the same or similar product. You may be asking, “Isn’t there more to it?” Of course! Starting with… Develop a Plan Startups have a lean financial foundation. Every dollar counts so it’s important to plan out every piece of the logistics process you can before you start spending. Focus on production planning and demand planning. When it comes to production planning, you need to know your lead times internally. Do you want to sacrifice speed for cost? Are you producing locally, nationally, or internationally? Is your warehouse half between your office and the production site or somewhere else? Knowing where your product is, will be, and has gone is key to this type of planning. Demand planning mean you understand and, if you’re experienced enough, anticipate what your customers demand. Quick delivery turnaround, low-to-no-cost shipping, and prompt customer services are great places to start, but you’ll come to know your customers best.

Plan according to them and they’ll rarely been unsatisfied. Stay On Top Of Expenses As you develop a plan, be sure to keep an eye on what you spend. Startups often have small budgets and there’s little room for large expenditures that are not absolutely necessary. Every purchasing decision you make will affect future purchases moving forward. What’s most important to your logistics plan? Figure out which cogs in the logistics machine are highest priority and spend accordingly. Storage, suppliers, customer service, and more are all worth spending money on, but you only have so much to go around. By creating a budget with key expenses, you know exactly where your money should go and what can be trimmed down the road. There will always be bumps and emergencies, but as long as you track your spending properly, logistics is going to go much smoother. Be Ready To Spend You can’t plan for everything. Logistics isn’t simple and things are going to go wrong. Product will be lost, shipments will be delayed, and sometimes customers won’t be satisfied. Issues like these are going to arise more often than you’d like but they’re par for the course in any business, startup or veteran. Spend when necessary and cut back when you can. Be ready to expedite a shipment to rectify a mistake or when you need to fill a big order in a short timeframe. Make sure the added expense is worth it. If it isn’t going to fix a problem, the money is better spent somewhere else. The need to spend doesn’t always have to come from sudden problems. Sometimes company growth is rapid enough that it necessitates previously unplanned purchases.

Take it as the sign of success that it is. As long as you’re diligent, you can even things out as needed. Scale Consistently Don’t allow the growth of your startup to be undermined by poor scaling. The logistics process you implement is not static. As you reach more customers, ship more products, and expand to multiple markets, you’re logistics plan should be left to fall behind. Plan for the future no matter where you are in the present. Always be on the lookout for changes that can be made down the road. New suppliers. Alternative shipping companies. E-commerce solutions not yet implemented. Inventory management software. Each of these options and more will benefit you in the long term. Keep track of what will best assist your logistics process as your company grows, not after it’s already expanded. Trying to play catch up is only to cost you more in money and time than is worth it. Get Multiple Quotes Every option involved in your logistics process is not the only option. There are countless suppliers, warehouses, manufacturers, and more all around the world waiting to work with you. Saving money means shopping around. As a startup, that’s priority number one. Quality and price are not synonomous. Depending on what you need, you could find amazing quality for an incredibly affordable price. Discounts, Logistics Companies Are Your Friends

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