6 Tricks On How To Cut Supply Chain Costs

Supply Chain costs are present every day in the life of a Supply Chain Management manager. On the other hand, quality of service needs to be always improving. So, how to do this? In this article we give 6 ways of lowering your Supply Chain costs while improving your quality of service.

1. Adjust your inventory level

Understand what type of stock you have. Make an ABC analysis and be sure your stock is correctly placed in order to improve your efficiency while maximizing your quality of service.

Don’t forget to consider your SLOB stock – something many companies forget to do. SLow and OBsolete stock must be avoided and in case you have it, you should clear it out as soon as possible. It is costly, just to be there occupying space that should be used for more valuable items.

2. Analyze your transport rates and/or rates’ structure

Nowadays the transport market is way too competitive. Therefore, you probably are not overpaying for your transportation service. However you may be paying the wrong type of rate. For example, you may be paying for a Full Truck Load rate while a Pallet rate would be better for your business. Take a look at that and see if your can improve your margin.

3. Look for improvements in your warehouse

Warehouse layout is very important for the efficiency of your business. As explained before, your warehouse shall have the right zoning and layout. Overtime, your processes may change or the type of materials you are using may be different as well. Take that into consideration and evaluate your warehouse’s layout from time to time. Another thing you may consider changing is the type of handling material you use. There are new machinery coming out every now and then and some are smaller or have better characteristics for the type of products you work with, and changing this equipment may improve your business.

4. Streamline your processes

This may be a cliché, but it really can make a huge difference between having an oversized or a well-fitting structure. A helicopter view may help you understand if/where your bottlenecks are. Then, you shall analyze and discover why is that happening, solving the cause of it. Remember: it doesn’t really matter whether you have an efficient reception process in place, if afterwards you cannot put the items away on time.

5. Track performance

What cannot be measured cannot be managed.

How many times have we read/listened this throughout our entire professional life? Although it is said over and over again, the reality is that it is ignored many times in companies. Trust us: know what you want to measure, define the metrics that suits your reality, find a way to measure it for a certain period of time, and then look at the data to get to conclusions.

How many orders do you deliver on time? What’s the percentage of lines that arrive to your clients? How many picks a day your operators are making? Which suppliers are not delivering on time?

Track your performance and act accordingly.

6. Consider automation

There’s no future without automation! Technology is here to stay and much more is there to be done. Technology should be side by side with your team, augmenting its ability do do better!

Whether using robots to deliver your products to clients, or using chatbots to guarantee an excellent 24/7 customer service, or even using tools that intelligently read and understand the documentation and automatically insert its data into your system. Technology should be used to gain competitive advantage, maximizing efficiency and minimizing costs.

Having a professional assessing how mature is your company regarding technology adoption may be a great way of triggering technology adoption and becoming a better company.

Conclusion

Supply Chain management is a very complex activity. There are tons of variables to take into consideration when considering where to improve.

Nevertheless, every SCM manager knows that in order to be better, every company have to look after ways of improving its customer service while minimizing its resources usage.

Would you add anything to this list? Do you think we left out anything important to Supply Chain cost reduction?

Fell free to add a comment.