Every business must seek out cost savings in every corner of their operations. Wastage in supply chain processes, including raw materials, manufacturing processes, and finished goods can be a particularly large, yet unseen drag on the bottom line. That leaves you with one big question. How can your supply chain reduce waste?
4 Ways to Reduce Waste in the Supply Chain
Maximizing waste reduction must be an ongoing task. Hidden costs in areas like productivity, spoilage and product returns can silently erode profits. Use the following tips to reduce costs that can creep in due to waste.
- Review Product Designs – Especially in the use of raw materials, product designs may be improved to reduce waste in three main ways. Using different designs can reduce the quantity of raw material needed. Using less expensive materials to meet the same specifications can help. Finally, consider reducing the materials and or steps needed to package the product.
- Reclaim Waste Materials – The acquisition, receiving, storage and handling of raw materials can be expensive. Finding ways to reclaim and reuse raw materials lost in the manufacturing process can reduce that cost.
- Improve Product Quality – Unless your company has a formal reverse supply chain management system, defective products are costing you in at least two ways. Every time a product doesn’t pass quality inspection it must be handled to return it for retrofitting or disposal. Second, product returns that don’t end up back in inventory can literally be a complete waste.
- Manage Your Inventory More Efficiently – From avoiding stock-outs to minimizing handling, the effectiveness of your inventory management system has a significant influence on your costs. Even small inventory shortages or overages can result in exponentially larger costs in areas you might least expect, including customer satisfaction and lost sales.
If you liked this post, check out our recent article on how to improve inventory management.