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Finding solutions to the changing business landscape can be difficult for small business. There are plenty of transport based companies that are fabulous at moving goods. But for the best small business solutions look for independent logistic operators that are warehouse based, that can use any transport provider if requested.
Why is this important, freight in Australia is generally the largest component of your distribution costs, locking into a single freight provider means you will have little leverage to lower this cost. The population of Australia is spread out over a vast area as detailed by the Australian Bureau of Statistics in their 2009-10 year book.
From my experience the breakdown of costs for distribution as a general guide is 20% Handling, 30% Storage and 50% Freight. Handling and storage can be directly managed by negotiating unit rates for each of the service components and then limiting the amount of storage or processing you use. The freight on the other hand will vary greatly depending on the size and weight of your products and where the customers are.
Having the ability to swap freight providers as your products or customer base changes, can have a dramatic effect on your profitability.
So how can you tell, well firstly, a warehousing based logistics provider will be able to offer you a selection of freight providers or if you have a preferred freight provider they will be comfortable to use it. Secondly they will have extensive pick & pack capability, not just pallets or cartons, but be able to manage single inner sales units and have extensive inventory systems to manage the processes.
Freight based companies will have good vehicles and tracking systems, and may charge lower rates for storage and handling, but may more than make this up with higher costs on freight which you are locked into.
Selecting a logistics provider, ask for references from current and past customers of a similar size and nature to your business. Being able to build trust with your logistics company will allow you relax and enjoy your core business knowing that everything else is taken care of.
