Tighten up: how to save money on this key business expense

By Walter Scremin, CEO, Ontime Delivery Solutions

With high inflation and rising interest rates eating small business margins, it’s time to tighten up on high-cost business areas.

A critical top five cost for many smaller Australian companies is delivery transport – it’s a constant challenge for businesses that rely on shipping goods to customers because delivery transport costs can easily run away from you.

There’s a huge opportunity in analysing your delivery costs because almost every business has inefficiencies in this area which can be tightened up – often significantly.

To save money on delivery costs, businesses should consider:

Preventing lost or damaged deliveries: A great place to start is getting the parcel delivery basics right. Use appropriate packaging, and clear, accurate labelling. Combine with a good RFID/telematics system to assist with proof-of-delivery and cut down on misplaced parcels.

Understanding all costs: There are myriad costs involved with deliveries. Using an impartial delivery fleet audit helps you to isolate and understand these costs, and is a crucial first step in making changes to bring these costs down.

Avoiding ‘false economy’ decisions: Most SMEs with delivery demands rely at least partially on external suppliers for support. It can be tempting to go with the cheapest provider when outsourcing your delivery requirements. But going cheap can end up costing you more if that supplier cannot provide a professional, reliable service.

This is a classic ‘false economy’ scenario, which creates many problems including the potential for dissatisfied customers and lost business. Make sure to research potential suppliers. Be prepared to start slow and gauge their service before increasing your commitment.

False economy part two – staffing: It’s not uncommon for small businesses to pinch staff from other departments to run deliveries during peak times, or when a regular driver is not available. Some business owners have even been known to race around town themselves, desperately trying to get their deliveries done. It’s another false economy mistake. It means other areas of your business suffer and become less efficient. Ensuring you have the resources on hand to cover any demand peaks or absentees can actually save you money in the long run.

Going flexible: There is a danger in delivery fleets of taking on too many fixed costs – this is especially so if you decide to do all your deliveries in-house using your own fleet and drivers. Having flexibility in your fleet means your costs better reflect your business activity. A flexible structure that responds to short-term fluctuations is key and can save considerable money.

Tracking your efficiency: Telematics technology not only assists with proof-of-delivery, it also tracks drivers and is an important tool in driving efficiency. This tech can lower delivery costs, including fuel costs, and protect assets from inappropriate use.

Not letting standards slip: It’s important not to cut corners regarding your fleet assets during tough times. For example, skimping on regular maintenance schedules. In the bigger picture, these activities make your fleet run more smoothly, and more efficiently.

This article first appeared in Inside Small Business.

Written by Walter Scremin, Ontime Delivery Solutions CEO.