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Feb 9, 2016 4:22:00 PM

5 Ways to Reduce Supply Chain Costs

Supply chain costs can really add up to a significant amount – but there are many ways that you can cut them down and reduce expenses for your company.

You don’t need to be a big company to get savings, you can cut down your costs no matter the scale of your business.

Here are a few of the ways that you can bring down your supply chain costs and enjoy better profits for your company.

Take a close look at what your customers want – you might have established your supply chain based on a pattern of demand that is now outdated. Sometimes it can be cost effective to evaluate your customer demand patterns to make sure that your assumptions still hold up. When the requirements of your customers shape your supply chain strategy this will avoid any unnecessary costs for things that bring no value.

2. Supply Chain Strategy

Once you have competed step one and you have a good understanding of your customer’s needs, you will be able to move onto defining a good supply chain strategy that will help you to achieve your business objectives this will allow you to deliver on your promise for customer service. A good supply chain strategy will be adaptable to change and will meet all of the evolving needs of your customers. When the strategy is clearly defined you will be able to avoid wasting money on anything that isn’t relevant to your goals or your bottom line.

3. Internal Operations

There are sometimes internal factors within your supply chain that are not well aligned or defined. This can prevent you from achieving optimisation while also adversely impacting the supply chain performance. In order to reduce your supply chain costs it can be helpful to look into your internal operations so that you can see where they need to be improved.

4. Outsourcing

Sometimes you can save a lot of money by outsourcing your supply chain costs. If the service provider is more efficient and skilled in performing the required services than the company is, there can be a significant savings. The ideal outsourcing partnership happens when both parties get what they want and the partnership is proactive.

5. Performance Measurement

It’s difficult to save money when you don’t know how much you are spending – so it’s very important to measure your performance. Choose your most important key performance indicators and use them to measure your performance compared to your targets. Your organisation is unique, so your key performance indicators will be specific to you. When you set your own targets you will be able to make sure you are meeting your goals and operating at your best possible capacity.

Supply chain costs don’t have to drag you down – think strategically and put a plan into place to cut down the expenses and you will dramatically benefit the bottom line of your organisation.