We have enjoyed low gas prices this summer, but what will the price of oil be in 2017? This is just one factor that presents a challenge when planning future transportation budgets. The complex factors impacting your transportation budget may fluctuate unexpectedly, at times even from day to day. Oil prices, labor rates, and even traffic can affect your budget tremendously. To some extent, the factors that impact transportation budgets are out of your control, so how can you expect to set an accurate budget that will take these into account and meet the growth goals of your company?
Supply chain management is a sleekly budgeted industry, and when your organization has ambitious goals pertaining to trimming your transportation costs, it’s time to get creative!
Here are four points to consider as you create your transportation budget for 2017:
1. Don’t rely solely on lean inventory practices. Lean inventory has become impractical to apply in every situation. While lean inventory methodology may be ideal, small and frequent shipments create other challenges with the rising costs of transportation. To succeed at maintaining lean practices, many companies need to combine lean inventory practices with economies of scale to better meet transportation budgets. Consolidating shipments and sharing routes is a great way to do this*.
2. Don’t put the responsibility solely onto operational managers. Limiting purchases and cutting overtime may seem like easy ways to meet budgets, but generally, you should trust your managers to make those decisions for the company anyway. Motivate your team to make good decisions in different ways: consider bonuses, team-building activities, or sharing resources.
3. Plan a timely schedule. Transportation budgets can become lopsided if unexpected costs occur early in the year, and then the budget spirals out-of-control at the end of the year. If oil prices rise in 2017, plan ahead so your entire budget doesn’t fall apart by October.
4. Shop around for your supply chain management companies. This is a highly competitive field, and you may be able to find less expensive, more competitive companies. Some companies may have hidden fees or additional charges, and these extra charges will ruin your budget. Find a reliable, timely, competitive company that will meet all of your logistic needs.
Transportation costs fluctuate, but with careful planning, teamwork, and budgeting, your logistics can align with your budget, in turn helping you meet your goals.