In any business, bringing in more than you spend is the name of the game, and in the supply chain, it’s not always easy. One of the simplest ways to get a better handle on these efforts is to find ways to cut costs in-house, because it’s often a lot easier and quicker to find ways to reduce spending by even 1% than to potentially forge new partnerships or find new sources of revenue.
One of the most straightforward way to tackle this problem is to look at your current operations and re-examine your strategies, either in-house or when dealing with your partners, according to Supply Chain Quarterly. As businesses grow, change or shift their focus over time, it is important to remember what the core mission of the company is, and readjust strategies to hone back in on them. This can, and perhaps should, involve conversations with your partners to see if you’re meeting their needs.
That kind of examination of existing processes and collaboration can help you find ways in which your efforts are, maybe, falling short of expectations or otherwise inefficient, and help you identify areas where you need to readjust, the report said. After all, if you haven’t nailed down what’s lagging in the first place, it’s basically impossible to address those underlying issues.
Think about storage
Among of the biggest areas where supply chain businesses may run into inefficiency is in their ordering and shipping efforts, according to Lean Supply Solutions. For instance, if your business routinely orders 100 widgets per month from a supplier, but only ships out 98 per month, the number of widgets you have in-house is generally going to grow to a point where you have too many on your shelves. What’s the fix? Examining long-term data and right-sizing your ordering on a month-to-month basis.
Along similar lines, it might be wise to reconsider your shipping and receiving processes, because if you can reduce the amount of time every item spends under your roof, that can have a major ripple effect on the company as a whole, the report said. While you might be more or less satisfied with your current processes, here is another area where even a 1% improvement can have positive effects throughout your operations over time.
Consider your workers
Another area where in-house costs can add up quickly is, of course, labor, according to Floship. While you may not want or need to cut staff – especially during an economic crisis – there are still plenty of things you can do to make sure you get the most out of each worker on each shift. Something as simple as more clearly communicating expectations or reconsidering picking and packing strategies in their entirety could help unlock efficiency you didn’t even realize was possible.
With all this in mind, it’s certainly important to look at every one of your in-house processes to see if there are little hiccups or kinks that can be smoothed over. These are simple ways to cut operational inefficiency and, therefore, reduce your cost of operation.