Managing a Supply Chain to Reduce Costs
There are plenty of ways managing a supply chain can be used to cut costs. This means more money to dedicate to other departments and more profit overall. Here are five smart supply chain management moves you can make to help reduce spend.
Consider Common Cost-Cutting Options
There are plenty of areas in the supply chain where you could likely save some money. Some of those are:
- Packaging– Finding the sweet spot between packaging that effectively eliminates damage and packaging that’s cost efficient is a great way to cut costs. The cheapest option isn’t necessarily the best option since poor packaging results in product damage.
- Space management– Use the space you have to the best effect. If your space doesn’t effectively meet your operations demands, consider either making adjustments or finding a space that will serve you better.
- Outsourcing– Depending on your business, there are some parts of managing a supply chain that are more efficiently handled by a third party.
Simplify Your Supply Chain
Take a look at your operations and determine if there is any way you can simplify any steps in the supply chain. Overcomplicated processes are more likely to result in errors which can cost big money.
Automation is a great way to help reduce the margin of error in improve efficiency, as well. You may need to contract a professional to look at your supply chain for opportunities for automation and help with implementation.
Managing a Supply Chain Means Consistent Assessment
It’s all in the numbers when it comes to assessment. Put metrics into place so that you can track performance and assess regularly. These KPIs are crucial to understanding what’s saving you money and what’s costing more than it should.
Efficiently Manage Inventory
Having too much or too little inventory on hand can cost you big. You pay to store surplus inventory; you potentially lose customers when your inventory is lacking. Keep up with trends in customer demand to help keep inventory on track.
A Just-in-Time inventory system might be the answer to making sure your inventory is just right, depending on the company. Implementation will cost you, though, so be sure the investment is worth the savings.
Plan Ahead: Visualize Supply Chain End to End
Sometimes you’ve got to take a step back to make sure you’re managing a supply chain as efficiently as possible. And end to end approach to supply chain management can help you see what’s working and what’s not.