Reduce Costs within your supply Chain
Freight and logistics costs represents and significant component of many businesses bottom lines. Creating a more efficient supply chain and freight procurement plan can drastically improve the overall cost structure of your business.
Here are the top 5 ways to reduce costs within your supply chain:
- Team Members
Anyone in your company that helps coordinate your supply chain needs to be well versed in the logistics plan you are building and refining. Document all steps and contacts that are needed to operate your supply chain. Convey the importance of efficiency and cost reduction to all team members involved in planning the freight and logistics budget. Encourage team members to suggest improvements and look for innovative new ways to improve the overall system.
- Packaging
Many manufacturing and retail companies do not invest the time required to build efficient packaging for their products. This is a crucial area that can help reduce costs. Directly spending less on more efficient packaging will help you realize savings, but also indirectly reducing the weight and volume of your product will reduce overall freight spend. Just be careful to make sure items are well protected, as inventory return or damage will quickly erase any efficiency gains.
- Data and Data Analysis
Only work with partners that provide robust data on your freight movements and supply chain spend. This will be the backbone to building a more efficient supply chain and reducing overall costs. With so much data available, it is important to partner with logistics companies that can provide relevant data across many aspects of your supply chain. Use this data to model costs and track freight spend across lane and mode.
- Only using one carrier or mode
Particularly for small businesses it is easy to get into a habit of only using one more or one carrier for the majority of your freight. This drastically increases risks in the long term though due to the very likely probability of a carrier to have reliability issues at one time or another, or even something so small as a change of personnel resulting in a carrier increasing their rates. It is really important to build relationships with more than one carrier and utilize more than one more of transportation in your supply chain.
- Inventory Reduction and Planning
Consider implementing a just in time inventory management plan across your business. This will reduce your inventory holding costs which will have a very noticeable impact on your bottom line. While many businesses are starting to do this, there are still many that have not yet taken into account inventory holding costs. By utilizing the available inventory and logistics data, you can accurately forecast when inventory will be needed and work with logistics partners to build a network that will provide the correct amount of just in time inventory to both your manufacturing facility and to your end customers.
ShipZephyr is a North American supply chain and logistics provider that provides refrigerated, dry van, flat bed, ltl, intermodal and managed transportation services nationwide. We’ve worked with businesses small and large to optimize freight spend and build a more efficient supply chain.
