Every industrial business wants to tighten up the bottom line. One of the quickest — and easiest — methods to save money is often hidden in plain sight: freeing up cash buried within the supply chain.
And due to the inherent complexity of supply chain operations, there are countless ways for managers to cut costs. Here are five ways to get started.
1. Give the customer what they want.
Just as no single supply chain solution suits every manufacturer, different customers will seek different services. Do your products rely on freshness and quick turnarounds? At FreshDirect, for instance, they most certainly do, so the team there has invested in a cutting-edge campus outfitted with tons of advanced tech — not to mention 9 miles of conveyor belts — to fine-tune their turnaround times.
Perhaps your products rely on specific delivery terms or white-glove assembly assistance and setup. Carefully evaluate exactly what your customers need, and invest in providing just that. This will save your supply chain money, and customers will be happy to pay for precisely the type of service they require.
2. Make the numbers work for you.
In the age of Industry 4.0, success is about more than merely gathering analytics: it’s about applying that information effectively. By implementing performance reporting, supply chain managers can save on everything from labor to delivery time to energy usage.
As Scott Stone, director of marketing for Cisco-Eagle, recommends, “The very first thing any company should do is strive to truly understand its costs.” By embracing the systems that collect appropriate metrics and precisely analyzing costs, managers can keep a finger on the pulse of what’s really happening.
3. Build savvy partnerships.
Healthy and proactive industry partnerships are a sure-fire way for supply chain managers to save money. While any outsourcing activity comes with highs and lows, the work of building a savvy, well-balanced business network can pay in dividends, especially if your partners possess particular skills or resources that the existing supply chain otherwise lacks.
For example, teaming up with other shippers — both near and far — can be very effective for reducing freight costs and helping with the execution of last-mile delivery demands.
4. Take full advantage of every inch of your space.
Warehouses play a critical role in the supply chain, and tend to contribute significantly to overall expenses. Industry specialists recommend taking stock of all warehouse space and focusing on ways to bring about higher efficiency, whether through reorganizing, new racking methods, or implementing sophisticated WMS systems.
Supply chain expert David Martinelli describes warehouse optimization as an organized, diligent fight to “eliminate open spaces.” Companies can increase storage density, decrease freight costs, reduce damage, increase floor space, and save on overall costs — all by cutting out unutilized or underutilized space.
5. Capitalize as effectively as possible — on your capital.
Supply chain finance (SCF) is growing at unprecedented rates. Supported by the security and ease offered by modern technology, SCF helps managers free up the cash flow that can otherwise remain locked within the supply chain — no bank required.
SCF opens up countless opportunities when implemented effectively, allowing supply chain managers to leverage extra capital for improvements, innovation, and new projects, all without the cost or hassle of debt, equity, selling assets, or acquiring loans.
Resources:
- Behind the Scenes: Exploring FreshDirect’s Logistics and Supply Chains – ThomasNet News
- Making the Most of Supply Chain Data – ThomasNet News
- Managing Modern Warehouses With WMS – ThomasNet News
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