Introduction

A typical indirect cost that squeezes profits in the manufacturing industry is “logistics costs.” For companies with overseas bases, including in Vietnam, international shipping fees and excess inventory can threaten business operations. This article explains how to systematically optimize logistics costs starting from procurement reform, using the latest data and specific examples. By the time you finish reading, you should have an actionable plan you can start on tomorrow.

Latest Trends in Global Logistics and the Vietnam Market

As of the end of July 2025, the Drewry World Container Index was $2,499 per 40ft container, a decrease of about 60% from the 2021 peak, but still 15% higher than pre-pandemic levels (2019) (drewry.co.uk). Meanwhile, domestic logistics costs in Vietnam account for 16-17% of GDP, significantly exceeding the world average of 10.6% (vietnamnet.vn). Although there is an advantage in labor costs, undeveloped transportation infrastructure and multi-stage transportation are the main causes of high costs.

Structure of Logistics Costs and Major Challenges

Logistics costs in the manufacturing industry are generally said to be composed of transportation costs (55%), storage costs (18%), cargo handling costs (15%), and administrative costs (12%) (internal benchmark values). Transportation and storage costs, in particular, are heavily influenced by procurement conditions (lot design and Incoterms). Large-volume orders lower the unit price. However, since inventory and warehouse costs increase, the overall cost does not necessarily decrease. Conversely, frequent small-lot orders increase the transportation unit price, which also leads to higher costs.

Cost Visualization with Data-Driven Procurement DX

The first thing to do is to grasp the current situation. By integrating purchasing and logistics data and setting KPIs such as PO issuance lead time, expenditure visualization rate, and inventory turnover rate, waste becomes apparent as numbers. There are reports of companies utilizing AI that have reduced logistics costs by an average of 15% and inventory by 35% (procurementtactics.com). By using man-hour automatic measurement tools like Qasee in conjunction with BI dashboards, you can move away from individual-dependent Excel management and speed up decision-making across the entire company.

Supplier Consolidation and Lot Optimization

Optimizing order lots (recalculating MOQ <Minimum Order Quantity> / EOQ <Economic Order Quantity>) is the shortest path to simultaneously reducing transportation and inventory costs. For example, simply consolidating parts for the same destination into a weekly consolidated shipment can reduce the transportation unit price by an average of 12% compared to FCL <Full Container Load>. One of our clients switched long-tail items from monthly orders to weekly consolidated shipments, shortening inventory days from 45 to 25. As a secondary effect, supplier consolidation reduced the number of purchase orders issued by 30%, also cutting down on administrative man-hours.

Incoterms & Multimodal Transport Optimization

Changing Incoterms from EXW to FOB changes the area of transportation responsibility and improves cash flow. There is also a case where total logistics costs were reduced by 6% by negotiating insurance premiums and forwarder fees in a lump sum (ship4wd.com). Additionally, using multimodal transport combining rail and sea can maintain lead times while reducing CO₂ emissions by 25%. This is an effective measure in terms of both environmental impact and cost during periods of high fuel surcharges.

Warehouse Automation and On-site IoT

The RaaS <Robots as a Service> model for AGVs/AMRs has become widespread, and implementation costs have decreased by about 18% compared to 2023. In many cases, the return on investment period has shortened to 12-18 months (agv.inovatica.com). By combining them with barcode readers and torque management IoT, you can achieve both a reduction in cargo handling errors and enhanced traceability. Furthermore, by linking with a WMS <Warehouse Management System>, autonomous transport can be carried out day and night, and some factories have reduced personnel deployment by 25% compared to peak times through this measure.

OHTA Vietnam’s Support Case Study and Roadmap

We partner with over 50 fastening parts suppliers in Vietnam to offer a model of “local consolidated procurement + weekly consolidated shipments.” For one Japanese precision equipment manufacturer, we reduced transportation costs by 18% and delivery times by 30%, significantly improving cash flow through inventory reduction effects. The implementation roadmap consists of the following four steps:

1. As-Is Diagnosis: Acquire 90 days of logistics and procurement data to visualize KPI gaps.
2. Quick-Win Measures: Change Incoterms, redesign lots, and conduct trial runs of consolidated shipments (3-6 months).
3. Data Infrastructure Construction: Real-time monitoring with BI dashboards and IoT integration.
4. Automation Investment: Phased implementation in the order of AGV/AMR, WMS, and barcode management.Through these measures, we aim to reduce the logistics cost ratio by 3 percentage points of sales over three years.

Summary

• Procurement-based optimization simultaneously reduces transportation and inventory costs.
• Data integration and DX speed up decision-making and build a continuous improvement cycle.
• Balance cost and environmental impact by reviewing Incoterms and transportation modes.
• Warehouse automation × IoT strengthens cargo handling man-hours and quality traceability.
• OHTA Vietnam supports your company’s improvement with our local procurement network and Japanese-style quality control.