Supply chain costs are rising for consumers as well as businesses. The U.S. consumer price index jumped 6.2 percent last October, the most significant increase in thirty years. So now more than ever, it’s vital for businesses to find savings wherever they can. Yet, all is not lost if you look to help your bottom line.
Are you interested in learning how to improve your supply chain cost and improve efficiency? Well, keep reading for five cost-saving measures you can begin with now.
1. Check Workflow
Making your chain more cost-efficient doesn’t always have to do with the cost of transport. Often, hidden expenses continue to go unnoticed. So a strategy to look inward will help find inefficiencies.
Work through the entire process of your sales funnel first. You may find areas where systems bottleneck and produce more work. Labor costs are almost always places where extra expenses get incurred. Then after the sales functions, look at how your shipping movements get timed. You might not know that wait times drive up the supply chain cost.
2. Plan Ahead For Shortages
One of the best ways to improve efficiency is forecasting your product trends. For example, if you have seasonal products, warehousing them may cost more. If a product line has downtime, produce less until needed before shipping. Warehousing product that isn’t moving costs money and space. So when looking at sales trends, only buy products as needed to avoid overstocking.
But another critical factor is to recognize items that aren’t getting produced fast enough. Study the customers’ buying habits for specific products. You might find times when the item is in high demand. So prepare for increased sales by having enough products on hand and having the products customers want without waiting will also increase loyalty. Customers today rely on businesses to have their products when they want them.
3. Efficient Use Of Space
A significant expense to many businesses is warehousing space. Leasing and maintaining in-house storage facilities are rising in cost. For the small business owner, in particular, physical space is an expense they don’t need. Even larger operators find that outsourcing to third-party warehouses is a significant saving. The logistics industry can provide solutions for storage as well as shipping goods.
There are types of logistics partners that help reduce the supply chain cost. The small business owner enjoys the benefit of fewer labor expenses by outsourcing. And the smaller footprint frees up capital for sales growth activity.
Third-party warehouses have relationships with several options in the shipping industry. The benefit to the business is a greater ability to broaden its reach. And the supply chain cost of fulfillment with experts in their field is another labor-saving measure.
4. Handling Costs
Further, the types of processes used may not be efficient. A small business owner may find waste in packaging and shipping structures. First, the packaging of the product itself can increase costs. The shape and design of your packaging should also be efficient for transport.
Container space in the logistics industry is now at a premium. So, increasing the amount of product that can fit a pallet or container will produce savings. Loading products in more efficient material can also reduce damage and loss.
The other benefit is that your company can realize savings on the cost of materials. Add the benefit to the environment, and your business wins on several counts. Yet, it’s not only in shipping that efficient packaging can save on the supply chain cost. Storage space expenses are related to, well, space. So if the storage of your product is more efficient, it’s less expensive.
5. Use Logistics Experts
If you are a small business owner, you want to spend more time on what matters most. Increasing sales can get bogged down in the daily operation of fulfillment. Yet, there are types of logistics companies for every need.
The logistics industry has evolved to help businesses with more aspects than shipping. Warehouse management systems now take on the function of inventory management. Your 3PL partner tracks all your movements on one platform for product distribution.
Today, the small business owner never needs to handle a product once it’s produced. A warehouse system stores the materials and combines items on your instructions. Inventory is in constant contact with a platform that connects across all channels.
All these functions get performed offsite by a crew of experts to move shipments. Then, using relationships with various carriers, they can reduce the cost of shipping. These types of processes get moving faster with a firm knowledge of documentation. Once again, the small business owner frees their time for the things that matter; sales. There is a supply chain cost to every aspect of the logistics industry. Learning each process is not only costly but time-consuming.
Another benefit is the automation of the process. When inventory management, warehousing, and shipping work as one, labor cost gets reduced significantly. For the small business owner, these types of processes are accessible anywhere you have a computer. The world supply chain will return to normal again. So now is an excellent time to prepare for when the speed of logistics increases. Yet, more crucial to any business, it’s always an excellent time to look at reducing your supply chain cost.
Save On Supply Chain Cost
The benefit to your bottom line isn’t the only feature of an efficient system. Wherever you can produce a saving to your supply chain cost, you can pass it on to the customer. In today’s economy, that savings might be the most significant of all for business growth.
You can increase customer retention with the best use of the logistics industry. Contact us today if you would like to find out how these types of processes can help your company save.
