One of the most difficult aspects of supply chain cost reduction is the sheer number of cost centres across your supply chain. But few of the businesses that can benefit most overall supply chain cost savings realize that.
From transportation costs, to storing your office supplies in the warehouse, the individual costs in a supply are many, ranging from the plainly obvious, to the unseen costs that you don’t even realize are eroding your profit margins.
Improve Supply Chain Performance With These Cost Reduction Strategies
In addition to reducing overall costs across your entire supply chain network, these tips will help you improve the bottom line in other ways too.
- Customer Service – No. This doesn’t necessarily mean adding more staff to your call centre. But it’s important to review your customer service tactics because they can be a drain on your costs. For example, free same-day or next day delivery is a popular trend in customer service. But it’s costly for the companies that offer it. Don’t simply offer it because it’s trendy. Make sure your customers actually consider it an added value.
- Manage Your Space Better – This one can sound simple, but it requires more supply chain strategy than meets the eye. Warehousing space is costly. But reducing the amount of space you need goes way beyond stacking more on each shelf. From just-in-time ordering and delivery, to minimizing your raw materials requirements through optimizing manufacturing processes, there are almost as many ways for you to improve your warehouse space utilization as there are to streamline your overall supply chain operations.
- Outsourcing All or Part of Your Supply Chain – This can be a tough one to get your head around. How can you save money by adding a line item to your costs? Fortunately, the answer is really simple. If outsourcing some or all of your logistics doesn’t reduce your supply chain management system costs, then don’t do it. But consider this too, a third-party logistics company that doesn’t reduce your logistics costs wouldn’t stay in business for long.
If you found this post helpful, check out our recent article “5 Steps to Streamlining Operations for Business”.