Effective Ways to Reduce Supply Chain Costs
by Arina Smith Marketing 15 February 2018
Supply chain costs can soon mount up, especially if one isn’t careful, and there are a number of strategies to ensure that supply chain implementation is cost effective. While this is the case, one should not rush in and make cuts indiscriminately, as this could result in poor performance, rather it is better to analyze the various aspects of the chain and find areas where cuts can be made.
Streamline Customer Service:
If you analyze exactly what your customers want, you might find you are wasting money on express deliveries that could be dispatched on a regular cycle. While it is critical to identify the customer’s needs, with large-scale operations, it is often the case that the level of service is excessive, and every little adds up. A company might be fine with a 3-4 day delivery window, and by switching from same day to regular for the shipments, you will have reduced your outgoings without affecting the customer. If you have any doubts about the importance of customer service, there are informative online articles on the subject.
This is typically more cost-effective for some businesses, and with a huge 3rd party logistics industry, which includes pick and pack services, along with other cost-effective logistics solutions. The online retailer, for example, can really take advantage of a range of professional services, and if you use an established 3rd party logistics provider, they have the resources to handle seasonal surges and keep abreast with expansion. Many online retailers never see their products, as everything from the purchase to delivery is handled by a 3rd party logistics provider. This means minimum capital investment, and every organization can benefit from outsourcing essential services.
Sales and Operation Planning:
This is an effective way to streamline things, and it will help you to avoid having obsolete stock, which will eventually have to be moved. Predicting demand is critical, and with a system that involves input from both sales and production, you can achieve that perfect balance where things are always in the right place at the right time.
Having an expensive fleet of vehicles sitting around doing nothing is definitely not good practice, and by analyzing how best to utilize your assets, you will likely find ways to cut costs. You might, for example, have 5 or 6 trucks that deliver daily, and by reorganizing, you can achieve the same objective with only 4 vehicles.
If you want to fully understand your logistical operations, you must find an effective way to measure performance. One must never lose sight of the goal, which is to deliver the product to the customer, and by focusing on operational management, it is possible to streamline the logistics process, reducing operation costs.
Every supply chain can be configured for maximum performance and by concentrating on the above areas, it is possible to attain a high level of efficiency and keep operating costs to a minimum.
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Featured Image Source: https://www.industryforum.co.uk/resources/insights/supply-chain-success/