5 Factors That Unpack Your Logistics ROI 12/5/23

Measuring ROI is important for all businesses, from tiny startups to major corporations, to determine how to drive revenue and implement cost-saving strategies.

ROI (return on investment) is an increasingly common term. It is heard in board rooms, at conferences and during bid analysis. Everyone, from individuals running eCommerce businesses out of their homes to CEOs of massive companies, uses it. When it comes to the supply chain and the world of logistics, ROI is everything. And yet, it is often perceived as a difficult aspect to measure in ROI terms. ROI in logistics, however, is measured the same way ROI should be measured across all lines in a budget: Savings, productivity and increased revenue.

Logistics ROI can be measured over a period as short as several months or as long as several years. When working with various vendors, implementing new technology, growing as a company, or just functioning during periods of stasis, ROI must be consistently measured to make sure you’re competitive in a world driven by fast shipments, high customer expectations and competitors determined to beat your bottom line.

In this article, we will discuss five factors that can help operators determine and optimize their ROI. Read on to find out more about:

• Automation

• Optimizing on the ground

• Getting a handle on international shipments

• Supply chain visibility

• Cultivating logistics talent

We will also go over how Resource Logistics Group can help business owners increase ROI through implementing measures related to these points and more.

1. Automation

Automation is no longer an option in the world of logistics — it is a necessary tool that businesses can and should use to increase ROI. Automation is a cost-saving measure that reduces overhead, eliminates the possibility of mistakes, and frees up employees on all levels to focus on more urgent, complex tasks. Manual processes that could be automated are estimated to contribute to a loss of 520 hours per year on tasks that technology could handle. that adds up to almost $10,000 per employee annually. 

2. Optimizing on the ground

Technology should not just be limited to the office. In the supply chain, it belongs in the real world, in the spaces where shipments are actually delivered. This means utilizing technology that relies on real-time feedback to create route optimization — which finds the most efficient routes for shipments. This delivers on the promise of rapid delivery, keeping consumers satisfied and preventing unnecessary overtime for employees.

3. Get a handle on international shipments

As more and more companies work to compete on a global scale, an increased focus on international compliance is necessary to accurately evaluate your ROI. Delays due to shipments stuck in Customs and fines related to failure to comply with regulations can all add up. These cost businesses in lost revenue, both long-term and short-term.

4. Supply chain visibility

A savvy operator must know every step of the supply chain. This helps identify problems and errors before they completely derail a shipment. By focusing on communication, points of contact and, most importantly, data, everyone involved in the supply chain from vendor to customer can communicate and optimize their operations. 

5. Cultivating logistics talent

Much time is spent on touting the power of automation — and rightfully so — but employee talent must not be overlooked. Not only are there some roles only a human can do, there are also customers who only believe in doing business with companies who treat their employees ethically. 

Understanding the costs, benefits and losses of employee hiring versus retention is core to an accurate evaluation of your ROI. Businesses with high staff turnover suffering financially each year. Studies have shown that the cost of losing a salaried employee in particular is especially high and may cost a company as much as twice that employee’s annual salary. Hourly roles can cost an employer thousands of dollars per year. 

Employee loss costs associated with failure to retain include the obvious: money spent advertising, interviewing and training to fill the role. However, there are also hidden costs associated with this. 

Newer employees face a learning curve, and as a result their errors can add up. High turnover can also result in decreased productivity among other employees, which can affect ROI. Smart business owners know to invest in employee retention. That means rigorous vetting during the hiring process and making staff feel appreciated financially and emotionally in the long-term.

Resource Logistics Group and your ROI

Logistics ROI can be complicated. Resource Logistics Group exists to demystify the process and assist with back-office solutions. We can start this by offering you a free benchmarking analysis of LTL and FLT pricing plus insight into contract language. We will not take over your day-to-day operations; we will merely act as a money-saving guide to help you optimize your logistics ROI and grow your business. 

Contact Resource Logistics Group to learn more.