5 ways to reduce supply chain costs and meet customer demand

ways to reduce supply chain costs

Analyzing your supply chain cost centers, supply chain vendor management, outsourcing, optimal scheduling, and freight forwarding are five basic ways to reduce general supply chain and supply chain logistics costs.

1. Look at your current supply chain spending

When analyzing the cost of your supply chain, it’s helpful to look at these basic categories: warehousing, transportation, inventory, personnel, and the cost of goods. You may also want to consider the Supply Chain Council’s SCOR® framework (Supply Chain Operations Reference) a unified structure for business processes, performance metrics, practices, and people skills. The case for end to end supply chain visibility is clear as a means to reveal hidden costs and poorly managed supply chain logistics, especially in international moving. Working directly with a freight forwarder is a possible solution to transportation challenges.

2. Comparing supply chain vendors

Neglecting to re-evaluate historical relationships, and lack of due diligence on initial selection of new vendors, can make vendor relationships untenable. Part of total supply chain visibility includes a look not just at the business processes at each link in the supply chain, but the suppliers themselves, from a freight forwarder all the way down to manufacturing personnel. This type of visibility can unearth hidden opportunities for lower costs and better quality partnerships.  

3. Look at supply chain outsourcing

There are many pros and cons to consider in evaluating whether to outsource supply chain processes. The promise of savings and the ability to focus on core businesses, rather than on the supply chain, present not only cost reduction opportunities but the possibility of higher quality. Entrusting supply chain logistics such as transportation to a freight forwarder, for example, can ensure quality handling and prompt delivery which ultimately satisfies customer demand. Outsourcing other elements in the supply chain can under-deliver on the promise of cost savings if partners present unrealistic timelines or don’t integrate smoothly with your business. Of course China is always a go-to subject in discussions of contract supply chain logistics, international moving and general outsourcing. Pros include low-cost labor, growing infrastructure and advances in the degree of strategic value Chinese partners can provide. At the same time, with those advancements and a rising standard of living, the low costs companies have traditionally enjoyed may go up over time.  

4. Consider the role of scheduling in your supply chain

Arguably the most significant cost impact in managing your supply chain is the failure to meet customer demand. Ideally, having people, systems, and processes in place to support total supply chain visibility allow you to scrutinize potential scheduling delays from manufacturing to delivery. Looking at transportation logistics partnerships as part of your cost analysis will be essential, especially when international moving is involved. Enter #5, freight forwarding.

5. Consider freight forwarding as part of supply chain logistics

Working directly with a freight forwarder has many advantages, for example, broker relationships. Your supply chain can benefit from the quality provided by a partner for whom transportation is a core business, along with reduced liability for freight loss and damage claims. With the importance of meeting customer demand, the value of working with a company whose sole focus is getting products to destinations on time can’t be overstated.

Ultimately, it’s important to start viewing your supply chain not as a cost center but as something elemental to fulfillment of customer demand.

If you need help getting your products from Point A to Point B, call 888-799-5033 and the experts at Suddath® will help you navigate these complex supply chain waters.