Batching & Cost Saving Strategies in Logistics

Co-Founder

Alexandra Kazemir-Yampolska

18.03.2024

8 minutes

Logistics is an indispensable part of most businesses which provide products to customers. It has various types of management and organization, yet almost every business owner is deeply interested in how to provide delivery optimization and effective order fulfillment. The question of costs spent on logistics is also a cornerstone as they impact overall pricing, and in terms of harsh competition, cost reduction techniques implied in logistics are a must to withstand challenges.

Let’s talk about how modern automation and batching can help gain cost-saving goals in logistics, and which tools can be useful to implement them in your business.

There are 5 main types of logistics depending on their main operation processes.

  • Inbound logistics refers to the transportation of goods and commodities between suppliers and manufacturers.
  • Outbound logistics is what provides delivery from the manufacturing facilities and warehouses to their customers who can be buyers, retailers, or any other link in the supply chain.
  • Reverse logistics refers to the issues of replacement or return of the goods from end-users to sellers or warehouses, or just to manufacturers.
  • 3PL aka third-party logistics is an outsourcing model when the transportation of products is delegated to third parties i.e., logistic centers, companies, shippers etc.
  • 4PL is the model where an additional supply chain link is involved in the form of SLP or a single logistics partner hired by the 3PL company.

Although these logistics types have differences, their main intention is the same. They need to provide supply chain optimization to operate quickly, accurately, efficiently, and cost-effectively to win the competition and get customers’ loyalty.

In terms of today’s markets, batching methods and especially their automation can gain the highest results in these strives for optimization and cost reduction.

Understanding What Is Batching in Logistics

What is batching in its essence? That’s the approach based on grouping various orders to deliver them together. Batching can be used by multiple parameters like destination proximity, same products’ orders, timing criteria, etc.

The essence is the same: you collect orders which can be categorized by the same criterion and fulfill them simultaneously. For example, when you get orders from several addresses in the same neighborhood, you plan their delivery at the same time and using the same transport.

As a result, you avoid multiple truck runs on the same route and thus, save time, fuel, and costs. That’s a brief example, yet, batching as route consolidation has various types.

  • Wave batching is the method when groups of orders are grouped in a wave and fulfilled according to their belonging to the wave.

The waveless method is based on prioritizing new orders by the time of their receiving. The newest orders are taken to be fulfilled.

  • The overlapping waving method is quite the same as wave batching yet warehouse workers do not wait until the whole process of picking and completing of the orders of a certain wave is done. When the wave is completed to its peak efficiency, the next one is taken to operation.

The whole concept of batching in logistics as the most efficient method is proved by its benefits which are as follows: 

  • Providing the principles of on-demand logistics which leads to higher customer satisfaction. Orders are completed quickly and accurately, and this creates strong loyalty among customers.
  • Scalability which helps to adjust logistics to the current situation. This method is highly scalable and it can be implemented in various businesses and supply chains.
  • Fuel and cost reduction. You spend less fuel to complete orders and you logically distribute orders according to the destination and principles of the last-mile delivery.
  • Time-saving. As you do not need to spend time to complete each order separately, you save time, and with it, you save work hours of your delivery and warehouse personnel which impacts payroll.
  • Eco-friendliness. Today, when businesses try their best to be sustainable and environmentally friendly, you can provide batching as a part of this strategy. The fewer miles your truck runs, the lower its carbon footprint and the better is for the environment.

If it is so effective and scalable, why doesn’t everyone use it then? There are some challenges you’d better know in advance to cope with them when deciding to implement batching in your logistics operation.

1. Performance decreases during the shift. Batching can be performed greatly in the early hours of each shift yet later waves can provide fewer grouping factors and decrease the whole performance of order completion.

2. Sorting is a cornerstone. It requires more effort from your staff while it can save time in general.

3. The constant need for sustainable packaging is also a challenge businesses face when they provide batching.

4. The need for special software solutions for logistics. Batching would not be effective if you plan it manually just with pen and paper. You need to integrate special automated batching software to make the process of planning, sorting, picking, and delivery clear and streamlined.

Besides, it is better to consider whether batching logistics methods suit your business and its operational field.

When to Implement Batch Picking?

The best batching logistics practices are used to complete orders in the following types of business operations.

  • E-commerce including drop shipping where the volume of orders is high and the catalog of products includes hundreds of positions.
  • Businesses with high levels of orders with similar products. When you get some SKU positions which regularly are ordered, you can make batching your inventory management method and easily cope with the peak loads in your warehouse.
  • Logistics optimization in businesses with high-volume orders. E-commerce marketplaces, grocery markets with delivery options, and malls can pick this strategy as the basis to complete high-volume orders with dozens of positions.

Besides, do not forget about the combined batch picking with other types of logistics methods, for example, multimodal transportation (combining air, sea, and land routes for cost-effectiveness) if you ship across the country or provide international shipping.

5 Effective Cost-Saving Strategies to Boost Your Logistics Efficiency

So, we considered batching as a win-win strategy in your logistics goals. Yet, it’s not enough to simply implement it to gain high efficiency instantly. There are some more methods and cost reduction strategies you can involve.

Real-Time Tracking: Technical Solutions on Guard of Your Logistics Routines

Being constantly in touch with your shipping department is a must to control logistics routines. Thus, you need a tool based on track & trace (real-time visibility for clients and internal teams) technology. It provides instant tracking of each truck on the route with numerous benefits for you and your customers:

  • Higher safety of shipped products.
  • The better reputation of your logistics department.
  • Control for truck mileage.
  • Instant vision of where and how each order is completed.

Tech-Powered Route Planning – How to Reach the Highest Goals

Route planning is what cracks the brains of each logistics department. You need to create routes which will be the shortest, the safest, and the most approximate to the customers’ addresses, and which will be cost-saving.

That’s where automation, based on data-driven decision making can be helpful. With the help of software, you can provide route batching, route optimization, and instant changes in routes if needed.

Automation for route changes, besides, can help to calculate instantly the delivery costs in case when routes are changed occasionally and avoid delays in shipping. 

Tech Integration and Use of Special Software Products for Mutual Integration Into an Effective Environment

Typically, businesses use several software products to manage the main processes in the company. As usual, the list of such products includes CRM, CMS, and ERP solutions.

Yet, when you need to automate logistics, you need a separate product, like TMS (Transportation Management System) and WMS (Warehouse Management System). They work in favor of streamlining the processes in your logistics routines, and besides, a good software product of that kind provides you with the following features:

  • Integration with other software solutions to create a united database and environment to control, plan, and perform all the operations in a singular mode.
  • Logistics data analytics and reporting to detect gaps and drawbacks, plan strategies and demand forecasts, cope with peak delivery periods, etc.
  • Real-time visibility & tracking for your shipping routes, trucks, and warehouse operations. That’s what creates a transparent workflow you can supervise and adjust.

Outsourced Delivery Operations

Sometimes, when you need to provide logistics services for your customers, suppliers, partners, or dealers, the best strategy is to outsource them. That’s what 3PL companies offer. In terms of when you do not have any logistics department and need to create it from scratch, this strategy is the most cost-saving and time-saving.

It also works great when you have seasonal overloads and your current logistics service cannot cope with the load during periods of holiday sales, Black Fridays, or seasonal increases in demand for your products. Instead of hiring extra staff and spending money on additional transport and inventory, you can outsource some operations to specialists who may perform them tip-top.

Conclusion

In terms of modern logistics, the following features are the cornerstones:

  • On-demand logistics principles which meet the needs of each customer.
  • Cost-saving methods of picking and completing orders like the same batching we talked about earlier.
  • Total automation of all logistics operations from warehouse to last-mile delivery.

When you need to provide a streamlined, uninterrupted, and effective supply chain, which is the basis of your business operation, you require a flexible, thought-out and cost-saving strategy. The best idea is to base it on automation tools to get instant data, quick analytics, and fast data-based decision-making.

About RedCat

At Red Cat, we specialize in the field of logistics software development. Our company works in a turnkey mode providing customers with detailed audits, and preliminary analysis of needs, risks and performance, and then we use this as a basis for custom product development to create the framework for a whole logistics operation.

If your goal is to provide supply chain efficiency at the highest level, we can help you with it. Just contact our team to highlight your needs, and we’ll gladly develop a project which fits your highest requirements in the field of logistics and warehouse management.

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