The eternal struggle between low costs and optimal service

Nowadays, if I need a certain product, I don’t even leave my house anymore. In fact, sometimes I just stay on the couch. The internet is always within reach and therefore the millions of web shops worldwide. Although it sometimes goes wrong, I still prefer shopping online. But why? First of all the endless offer online, followed by the increased convenience and finally, it costs me nothing more than shopping at a physical store. These low costs arise from the logistics processes that we created around e-commerce. For example, do I not like an item I bought? Then I just send it back for free, which leads to annoyance at web shops, postal companies and other logistics service providers. Because the increasing customer focus and convenience facilities limit your profit margins. How did it come to that? And where is it going?

Modern logistics is no longer that simple

Simply put, logistics is “getting the right things at the right time at the right location at minimal cost:. But you know that this definition is very simplified. If you elaborate on “the right things”, you will have to deal with Value Added Logistics, quality checks and, for example, order picking strategies. Then “the right moment”: this dimension too has taken on extreme forms. Term such as next and same day delivery, last mile solutions and scheduled delivery (within a period of a few hours) come forward here. And if we link these two to “at minimal costs”, the problem becomes clear. The eternal struggle between cost minimization and optimum service.

Ask yourself two questions and determine your route

In fact, this struggle itself is very contradictory. A paradoxical struggle. Because with the commonly used value strategies of Treacy & Wiersema in mind, you need to focus on one strategy. And where low costs lies in the focus of Operational Excellence, service optimization matches Customer Intimacy. So you have to distinguish yourself in a specific area, because being the best in everything is not possible. For this reason, Apple is not the cheapest. And Best Buy is not known for its service level. So ask yourself two questions: how do I keep low costs and how do I keep my customers satisfied? And on which of these two area scan you distinguish yourself?

More tips & tricks to keep low costs and optimize your service?

There are lots of ways to realize cost minimization and service optimization in logistics. Too many to write down. Therefore, we elaborate on our WMS system in a live webinar.