Most small business owners find it very challenging to make significant savings on their supply chain costs. The general belief is that only large corporates have the strategies, systems, processes and resources to reduce their supply chain expenses.
However, there are certain things that a company in any industry and of any size can do to achieve a good degree of savings. In order to achieve this, you need to know what steps to take and where to look. Here are some pointers:
#1 Customer service
It’s important to understand what customers want, rather than give them what you think they want. Your customers’ demands should shape the strategy you eventually adopt while planning your supply chain & its structure. When you focus on this, it will help you avoid adding costs for the things they find no value in.
For e.g-it’s common for many companies to provide a 24-hour delivery timeframe even when a large percentage of their customers don’t expect this at all. In effect, the company just ends up over-servicing its customers and makes a dent in its profits by spending on express deliveries.
The aspect to keep in view is that when your customer sees value in a certain service level, they won’t mind paying for it, as it helps them run their business in a better way. When you align your customer service processes to your customer requirement, it results in higher sales, higher profits and increased customer loyalty.
#2 Creating a supply chain strategy
It’s important that the strategy you design drive the tactics you follow and the strategy itself should be driven by your business objectives. The aim should be to define a strategy that will help you achieve your business objectives even as it helps deliver on your customer service promise.
A supply chain strategy is never a set-and-forget thing; it has to be adaptable and flexible in order to meet your customer’s and your business’ needs. Every action you take has to be precise and clear and be a tangible value-add to your bottom line.
#3 Planning your sales and operations processes
When you are planning your sales and operations processes, you should begin with categorising all the products by sales volume, and developing long-term goals and rolling out deadlines to decide whether the sales forecasts need to be altered or if your production and purchase plans can’t be altered at this point. The plans you make should result in an upward trend in sales and profits.
#4 The design of your supply chain network
Your network should be designed in a way that it minimises product handling; this helps keep costs low and increases your reliability. Keep costs down and reliability up by designing your network to minimize product handling. If you have excessive stock locations and your distribution centres are being poorly-used, that increases the risk of damage and error; in turn, this can result in poor customer service and increased costs.
Check of some section/s of your supply chain’s management or operations can be outsourced, such as transport and warehousing. If these aspects are managed well and your outsourcing partners are efficient and reliable, your customers will get consistent services, probably at a lower cost overall.
For effective cost reduction opportunities & efficiencies that will increase your bottom line, contact the experts at Benchmark Cost Solutions at this number – 02 9525 0777. If you prefer, write to us at this email address, and we will revert quickly.
Thanks for reading,
Benchmark Cost Solutions Team
02 9525 0777