How to optimize logistics costs through forecasting ?

Logistics optimization is a lever of profitability, performance, and competitiveness in retail.

The question that is posed in the same terms to all players is as follows: how to optimize logistics costs while preserving service quality and customer experience ?

The answer is far from obvious. The supply chain, from supplier to store, involves many interdependent players and processes. When you act on one link in the chain, you generate repercussions at other levels. So you need to be precise and rely on data to make the right decisions.

In this context, forecasting, and especially projections, become essential.

They help retailers to anticipate future needs and activity, and reduce costs without compromising supply chain efficiency.

In this article, let’s discover together how to make forecasting a powerful lever for optimizing your logistics costs.

Anticipating logistics needs

From Forecasting to Projection: Improving Logistic Planning

In retail, logistical optimization primarily involves finding the right trade-offs between several challenges which, at first glance, seem complicated to reconcile:

  • Control of logistical costs
  • Customer satisfaction
  • Efficient operations management
mastery-of-logistical-costs-customer-satisfaction

To find the right balance, you need to be one step ahead. If you know what’s coming, you can anticipate operations at all levels over several months. That’s why demand forecasting has become an essential part of the supply chain.

With a solution like Optimix XFR, you can establish sales forecasts by combining corrected historical sales data and various influencing factors. However, forecasting alone is not enough to effectively anticipate your operations. You need to go further and transforming forecasts into business projections.

This is the whole point of a supply chain optimization solution, which relies on advanced algorithms to model predictive scenarios based on forecasts.

This gives you visibility over multiple logistics scenarios. You can simulate different situations by modifying input variables to assess potential gains and make informed decisions.

Thanks to the projections, you plan more efficiently, adjusting resources, storage capacities, and choosing the best logistical flows.

Plan for Better Management: Anticipating Logistics Costs

To optimize logistics costs, the best weapon is anticipation. In retail, anticipating needs goes well beyond the quantity of products needed.

Of course, the forecast helps you to adjust orders and define the quantities required for each store. With forecasting, you go much further. Anticipation is as much about the store as it is about warehouses and transport.

1. Anticipate logistics needs at store level

At the store level, forecasts and projections help to better plan activity.. This anticipation extends to all operational aspects of the store.

First, you can estimate your human resource needs in advance.. Thanks to forecasts, you know when peaks in activity will occur. You can use this information to plan the schedule of your checkout hosts and hostesses, since sales forecasts dictate the workload at the checkout.

In parallel, projections also serve as a compass for allocating the necessary resources for receiving orders.. You know in advance how many trucks will arrive and how many unloading docks will be needed. You can anticipate manpower requirements for receiving and shelving.

By adopting this projection-based approach, you can better adjust your workforce, identify potential congestion points and optimize team assignments. In this way, you can optimize your HR costs.

Another advantage of projection is that it strengthens your ability to smooth out activity.. For example, if you find it difficult to manage the volume of arrivals scheduled for Friday, you can redistribute these receipts to other days of the week. In this way, you can streamline your operations, even during peak periods.

2. Anticipating storage and transportation needs

Projections also enable better storage and transport requirements.

With precise data at your fingertips, you know in advance how much storage space you need to allocate. This proactive planning helps to optimize storage. You limit the costs associated with excess stock, while minimizing the risk of stock-outs. You can anticipate the fill rate of your warehouses and better manage warehousing costs.

Projection also makes it easier to plan warehouse operations. You can anticipate staffing requirements and adjust them according to volume and forecasted input/output.

Similarly, projections make it easier to plan transportation requirements. You know your needs in advance, and can pass them on to your partners.

Sharing the logistics forecast

Optimizing logistics costs concerns all players in the chain, not just the retailer. Sharing the forecast facilitates communication with partners, such as carriers, but also with manufacturers.

Retailers and manufacturers both stand to gain from working hand in hand based on business projections.

OPTIMIZING MANUFACTURER'S PRODUCTION CYCLES

With a shared forecastyou offer greater transparency for manufacturers. They can then better organize their production cycles.

In the absence of detailed forecasts, manufacturers often adopt a fail-safe approach. They plan large production runs, then change production line settings to accommodate a different product or packaging. They then need to stock up to meet future orders. Under these conditions, lack of visibility generates avoidable storage costs.

Conversely, when distributors communicate their needs, the manufacturer can anticipate production start-ups. He can decide to produce smaller quantities, even if there is a cost involved in resizing his production line. The shared forecast therefore enables him to improve his economic balance.

STOCK FORECASTING: TOWARDS OPTIMIZATION OF CAPACITIES AND COSTS

Access to customer forecasts helps the manufacturer better manage its inventory levels.

Rather than producing large quantities and stocking them, anticipating needs enables production to be synchronized with actual demand. This approach offers better management of production capacity and reduced storage costs.

Since he knows his customers’ order forecasts and firm requirements, he no longer needs to stock raw materials or finished products excessively. He can produce more on the fly and better organize his capacity.

forecasts-and-projections-for-planning-activities

ADJUSTING THE MINIMUM ORDER FOR PROFITABLE LOGISTICS

Suppliers define a minimum order quantity to compensate for their production, labor and storage costs, etc. This minimum order quantity is a guarantee from the manufacturer to cover its costs and generate a minimum profit.

As a distributor, if you provide your supplier with detailed forecasts, you can lead them to reconsider their minimum order quantities.

Based on the information you provide, he’ll be able to better manage his cycle, better rework his minimum production, and produce more precisely. He’ll be more in tune with your needs, and the minimum order will be less of an obstacle.

SELECTING THE BEST QUANTITATIVE SCALE

In their general terms of sale, suppliers include logistic cost scales based on the quantities ordered and supplied to account for economies of scale associated with orders of complete logistics units (pallets, trucks, containers).

You can rely on forecasting to reduce logistic costs by selecting the best quantitative scale.

This approach is interesting because it helps to strike a balance between transport costs and storage costs. Some products are bulky and therefore expensive to store. Others, on the other hand, will cost more to transport.

Optimizing logistics flows: Forecasting to reduce costs

With the transformation of forecasts into detailed projections, retailers and their supply chain ecosystem have relevant knowledge to rethink and optimize logistics flows.

Based on demand forecasts, the distributor establishes activity projections that can be shared with other links in the chain. The optimization of the supply chain becomes collaborative and gains in fluidity. Companies can strategically direct their flows to maximize operational efficiency and reduce costs.

IDENTIFYING THE BEST LOGISTICAL ROUTES

Projections enable the testing of different logistical flow options and the calculation of their impacts in terms of logistical costs.

For each product, or group of products, it is then possible to determine the best logistical route to minimize transportation costs and/or limit energy wastage.

Identifying the most efficient routes minimizes distances traveled, optimizes loads, and reduces the overall carbon footprint of the supply chain. Forecasting thus becomes a lever for reconciling operational efficiency and environmental responsibility.

identify-the-best-logistical-routes

IMPROVING THE ALLOCATION OF GOODS

The use of forecasts allows for a more precise allocation of goods.. Retailers can allocate products more efficiently from the outset. This minimizes returns and overstocking.

This approach contributes to the reduction of storage levels and a decrease in the transit of goods between different sites.

Towards Predictive and Optimized Logistics

Optimizing logistics costs is a major challenge for retailers. This is facilitated by the adoption of supply chain optimization solutions that not only deliver reliable forecasts, but also enable different scenarios to be projected.

With these tools, logistics managers can now anticipate requirements, whether in terms of warehousing, storage space or transport, and adjust operations accordingly. Sharing the forecast with other links in the chain streamlines communication, limits unnecessary expenditure and also helps to better control financial and energy costs. Finally, projections make it easier to identify the best logistics flows.

Players who open up to predictive and collaborative supply chain management can already achieve and profitability gains. gains.

Do you want to reduce your logistical costs while also stepping into the logistics of the future, which is more efficient, sustainable, and resilient?

Discover our solution Optimix XFR :

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