Skip to content

How to Reduce Supply Chain Cost?

How to Reduce Supply Chain Cost?

supply chain management SCM distribution product step

Reducing logistics and supply chain cost is the key to improve company bottom line and profits. As businesses go global, international trade becomes more feasible as it requires companies to both manufacture and source raw materials from overseas. This high mobility would require high cost and it becomes uncommon to note that most of the capital is spent on shipping products from one place to another.

Considering the fact, controlling transportation costs will be the main priority for leaders who want to expand company revenues. Additionally, they also need to manage logistics and strategy properly, which includes procurement and warehouse inventory.

Not only beneficial for improving financial performance, this would require paying more attention to logistics management. This would increase efficiency and minimise risk of chaotic management, such as overpay to workers and missed delivery. Here are 5 important tips to reduce logistics and supply chain cost:

  1.      Minimise supply chain bottleneck

Find out the main reason behind logistics and supply chain cost. Review and analyse the networks, and its emerging issues such that companies can immediately address them. Some of the strategies that can be used to minimise bottlenecks include carrier schedule planning and ensuring proper documentation for import and export necessities.

  1.     Streamline the order

Do not complicate simple things, including the ordering process. Make this procedure as efficient as possible with the help of a single software for finishing requisitions or purchase. Do not use too many different applications, since you would not be able to keep track of the order properly and might end up ordering too many products or inventory supplies.

In addition, you need to implement a system in which an order cannot be processed without authorisation and consent from the designated parties.

  1.      Outsource third-party logistics provider

If you intend to set up strategies to save on logistic costs, but you do not have an in-house expert on the field, you need to consider investing in outsource third party logistics provider. There are several key advantages you can obtain from hiring their services.

With extensive knowledge and network of the transportation and carrier system, you can determine the kind of shipment that is appropriate for a particular type of product, such that it would maximise efficiencies and lower transportation costs. They could also have powerful tracking capabilities to ensure that the goods are shipped and arrive at the destination at the designated time.

  1.     Invest in packaging

Do not just focus on how to pay less logistics and supply chain cost without giving improvement to your products packing. The better products are packaged, the less they will be likely damaged or broken during the shipment. When the damaged goods are received by the customer, they do not want to accept and request the new products to deliver.

Not only wasting time, this kind of situation will cost you a fortune. Therefore, make sure that whoever is responsible in the packaging process is performing their functions well to minimise any chances of damage.

  1.      Pay attention to customer demand

Every business owner should hold high the old-age mantra ‘customer is king’ to ensure that they make best efforts to provide the best service. However, they should also consider their companies’ service level ability. For example, if a customer expects the products to be shipped and arrive within 5 working days, you do not have to spend more money to shorten it to 2 days.

This article was first published here.