3 ways to reduce supply chain logistics costs

If you are a manufacturing company, you will have to bear the cost of operating…...
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If you are a manufacturing company, you will have to bear the cost of operating your supply chain. This cost can easily be reduced through proper management of each element of the chain. This helps to eliminate unnecessary expenditure. The savings that your organisation realises can then be used to improve other aspects of the business.

Here are some tips that you can utilise to reduce logistics costs related to your supply chain:

Cater to your customers’ needs

As a manufacturer, you will be looking to offer customers value by enhancing certain aspects of your service. However, if customers don’t benefit, there is no point in spending money on these value-added services. For instance, if your customer prefers ex-works delivery, provide it and save on delivery costs. In case a customer does not require immediate delivery, opt for cheaper (but reliable!) next-day delivery.

Assess your delivery strategy carefully to ascertain whether you are catering to your customers’ requirements or wasting time and money. This will help reduce your logistics costs and improve customer service.

Use storage space optimally

Many manufacturers have inefficient storage systems and methods of retrieving inventory. Poor storage strategy means higher costs, as inventory can get misplaced or lost. This could result in the necessity for additional personnel for locating inventory. You will lose time and incur higher expenditures.

Check your storage space to ensure you have adequate room for required inventory. Estimate stock more accurately based on production needs, and have systems and processes in place to identify and locate inventory quickly in the warehouse.

Automate manual processes

Certain aspects of your supply chain can be automated, thereby ensuring sourcing savings. Elements such as demand forecast, transport loading, warehouse management, inventory planning, and route planning can be automated. Relevant technologies and hardware are already available to assist your implementation of automated manual processes.

By opting for automation you minimise the chances of human error, ensuring cost reductions. It will also help improve quality and customer service.

Conclusion

Use these three simple tips to save logistics costs in your supply chain and it will have a ripple effect to benefit other spheres of your organisation.

Ed Cross

Ed founded Odesma in 2014 with the explicit intent of creating a new kind of procurement consultancy founded entirely on cloud principles. Deploying best-of-breed subject matter experts alongside the best on demand technology to deliver rapid and effective change for customers.

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