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Small and Medium-sized Businesses' Common Logistics Mistakes

Being a small business owner can be stressful. There’s just so much to do! And small and midsized businesses (SMBs) can be behind the large corporations because they often lose price wars to competitors with stronger purchasing power, don’t always have the IT help they need, and lack the power that comes with a huge brand name. Not a great place to start, to be sure.

To come up with a great product or service is the first step for any business. But equally important - but sometimes neglected, is to develop and execute a viable logistics & supply chain strategy for logistics. When it comes to international shipping and logistics, there are clear pitfalls that small business owners can take easy steps to avoid. Here are some obvious mistakes and how to avoid them.

Failing To Embrace Technology

This is a big one! SMBs often have fewer people, so missing out a new technology can really use up personnel resources. But this is the same reason they often ignore tech advances: we don’t have an IT team to help us through this change, so we’ll keep on going with our older methods.  However, if a small business does decide to level up their technology game, they reap the benefits. SMBs with better tech gain 15% more revenue each year than their lower tech counterparts.

Automatically Sourcing From China

When most people think about sourcing goods, they automatically think of China. But this is a mistake for many SMBs. To not consider other countries and the nature of the goods you are looking for can be costly. Many products aren’t really suitable for Chinese production, a country that specializes in things like appliances, transportation equipment, and consumer electronics. More complicated goods with complex technology, mixed SKUs, or unstable engineering should be sources elsewhere. Consider countries such as Vietnam, India, Peru, or Taiwan, to name a few. Above all, do your research before automatically deciding that China is the right place due to cheap labor cost – the money you save up front by going to a low-labor cost country could easily be spent on costs that pop up later on down the line.

Cheapest Shipping

Automatically choosing the cheapest option for transportation can end up being quite expensive. Don’t ignore cost altogether, but instead consider other factors along with cost. Remember, just because you’ve gotten an inexpensive offer, does not mean it is the best. Where you are shipping from, the cost of inventory during long sea voyages, and your deadline or transit time will affect the cost of your shipment. Some cheaper methods of shipping are great for one trade lane or market, but faulty in others. One great option to consider is teaming up with other SMBs to split the costs of a complete shipment.

Estimating Instead of Finding Exact Costs

Don’t guess or estimate the cost of shipping. Logistics costs are factored into the cost of your product, so it is best to track down the correct, exact cost. When SMBs guestimate the cost of transportation, they can set the cost too high or too low, both of which effect business. If you estimate the cost as too high, and pass that along in the price of the item, it can lower demand. If the item is priced too low and unrealistic of the actual shipping cost, it can cut into your bottom line.

Resisting Automation

The present level of technology makes doing international business far easier than ever before. In the past, SMBs would have to pick up the phone and talk to another person who may not speak the same language fluently in order to book an international shipment. It is estimated that 20% of the time, the human on the other end of the line makes a mistake. This human error ended up costing the US retailors about $684 million each year, according to research firm Ocean Audit. With the help of technology, there are fewer mistakes made. The person on the other end of the transaction can simply read the actual numbers as given to them by any number of new booking systems. Generating an invoice used to be a complex ordeal (so much that some service providers even charge for it) – now it can be printed out from the automated system within seconds (for free). Automation helps everyone save time and therefore money, from the shipper, to the freight carrier, to the supplier. Fleet is an online logistics marketplace that enables SMBs to automate the quoting process. Shippers can spend less than three minutes inputting all the information about their shipment, and they will receive competitive quotes from service providers who are ready and able to take care of the shipment. Fleet is also home to thousands of reviews about freight forwarders, enabling businesses to make well-informed decision about which companies to work with. Getting international shipping rates on Fleet is 5 times faster for SMBs compared to traditional methods, moreover Fleet also helps SMBs save about 20% on shipping cost. Automated tools like Fleet empower SMBs to not only make shipping easier, but has made nearly every facet of business better.

Getting Stuck In The Past

Estimating costs can be tricky. It becomes even trickier if SMBs are using yesterday’s metrics to make guesses about today’s costs. Nothing stays the same, and that is especially true for international shipping. From year to year, costs (everything from transportation professional’s salaries to fuel) rise. For that reason alone, last year’s shipment will most likely not be the same price as this year’s. Take into account that industry regulations and technology, which also change frequently, are factors in cost increases. Don’t get stuck in the past when it comes to estimating and budgeting for next year’s shipment.

Global shipping is nothing if not complex – and yes, mistakes are made while moving goods great distances in the name of business. Many small business owners have made mistakes and have rebounded on to the next order. However, new technology has allowed small businesses to become almost as strong as behemoth companies when it comes to moving goods. Supply chain service providers have also recognized the small business as a highly valuable market – which means they are catering to small businesses more and more. This is all good news for SMBs. With every shipment, with an excellent strategy, a wise implementation of technology, and even with some mistakes we've made, we become better business owners: quicker, smarter, more efficient. And in the long run, this will make our service better and our customers happier.

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