How To Set Up Logistics For Your Startup
You’ve developed an incredible product. It’s been crowdfunded 300% and you’re already through your final prototype and on to production. Your customers are waiting patiently.
You have not actualized the most important part of your business. Logistics. How are you going to ship your product to your customers? How are you going to optimize your manufacturing process and gather the materials quickly enough to keep up with the demand?
It’s more complicated than you might think. And in the era of Amazon Prime and Walmart.com’s two-day shipping options, it’s not easy to please your customers.
“But my customers will wait a decade to get my product in their hands.” That’s the mistake Oculus made out the gate with the Rift back in 2016. HTC beat them to market due to shipping concerns and they lost the lead (which they steadily gained back due to a superior product).
No matter how awesome your product might be, you need excellent logistics.
1. Could I Just Build In-House Logistics?
You’ve prided yourself on building this company from the ground up. You want to keep everything under your thumb. This means everything from manufacturing to customer service.
But how much more work would it be to build your own in-house logistics service for your own product?
You will need to consider all the costs associated. This includes transport, warehousing, sourcing, and licensing.
If you’re going to rent or buy a warehouse, you’ll need to pay for energy and employees. You’ll need fascinating, yet expensive pieces of equipment you never dreamed about like synchronized generators.
Even if you’re renting a warehouse, you need to consider maintenance costs. If you don’t keep up your fleet of vehicles, you won’t get the product where it’s going.
If you want to globalize, then it gets even dicier.
In essence, you need some willing investors who can give you a massive amount in capital if you’re going to begin with in-house logistics.
2. How To Choose a Logistics Company
In the U.S. businesses spend a whopping $1.5 trillion on logistics. Some of that was likely on crummy shipping and sourcing. Thus, some of that money could have been spent more wisely.
Here are a few things you should consider when choosing a logistics company.
Consider Your Own Needs
Where are you sourcing your materials? How much space will you need to store materials? How much product will you ship versus how much you will need to store?
If you’re in the food business, you’ll need refrigeration. If you sell delicate products, you’ll need excellent temperature control.
Before you go looking for a logistics company, sit down and write up your company’s needs. Then go find the company that fits your specifications.
If you’re not just shipping teddy bears across the world, you might need a particular kind of logistics company. Certain logistics services are suited to certain niche industries.
For example, if you are creating a frozen product, you need a company that uses refrigeration trucks and specializes in frozen food logistics. These companies need to know how to ensure the product stays frozen from factory to customer. They need to keep grocery stores accountable for the quality of the product they’re selling. If they just drop the product in the backroom and rely on variably reliable store employees, your product might not make it to the customer the way you envisioned.
This is why it’s important to thoroughly vet the logistics services you choose. It’s not enough to rely on reviews. Ask to inspect every part of logistics chain from supplier to customer.