The impact of in-transit damage on a company’s supply chain can often be significant.
Although insurance may cover some of the damage, this can result in a domino effect of substantial direct and indirect expenses for the company.
Direct Costs of In-Transit Damage:
This includes replacing the goods, administration costs, re-packaging, and re-shipping.
This can be particularly damaging as no one wants to buy goods from a business that does not protect its interests adequately, despite external factors.
This direct cost can result from compensation such as special discounts offered to customers due to the damage, return freight, and selling returned units at a reduced rate.
In some cases, damaged units cannot be resold. The costs for these unsalvageable products can add up quickly, resulting in immense product waste.
Indirect Costs of In-Transit Damage:
In-transit damage can harm sales through brand damage, significantly impacting the company’s reputation.
A customer receiving a damaged product can influence whether they will choose your business for future services.
Because employees have to spend time dealing with the damage’s fallout, it can fundamentally affect their ability to work on other projects.
This backup in production ultimately costs the company through employee wages and deliverables.
Damaged products can also damage relationships with suppliers and customers, which can have a long-term effect on the business.
Although compensation can be given as reassurance, a rift in the relationship can ultimately cost the company the customer.
Companies can minimize the impact of in-transit damage on their supply chain by reducing the overall cost by investing in proper packaging, securing transportation, and
effectively tracking and monitoring systems. These proactive measures will help companies mitigate the risk of in-transit damage and ultimately save on direct and indirect costs.