How to Reduce Supply Chain Costs
Modern supply chains are more intricate and wide-spread than ever which can lead to risks and money loss at each stage. In recent years, companies are battling with cost saving as powerhouses such as Amazon are putting pressure on businesses to lower costs while still delivering quickly and efficiently.
In order to reduce overall costs, warehousing and storage have to be fully optimised as part of a larger supply chain strategy. To reduce costs, companies can focus on it’s operations, for example: optimise space, reduce damage, minimise packaging and much more. A solution to optimise space is by having multi-client facilities. This allows for costs to be shared across multiple companies and you only pay for the area that you use. This also means you won’t need to hire your own employees.
Technology is a huge investment for most companies that usually pays off in the long run. As of March 2018, the annual labor expenses for a warehouse with 100 employees were at least . Considering this, making an investment into automating a warehouse can save on annual costs. Automating a warehouse can improve efficiency, streamline processes and reduce labour costs.
Even small improvements can be made using technology, for example, saving on energy costs in warehouses or storage units by using movement sensor lights and investing in technology such as automation that can work in the dark.
As part of a bigger supply chain strategy, visibility is essential in reducing costs. In order to strengthen and streamline the supply chain, companies need to know where their inventory is at any given time and be able to trace products from point A to point B. Companies will need to have strong forecasting software to be able to fully understand challenges like; seasonal peaks, changes in shipping demands and transportation issues.
Improving product and inventory management will allow for a more streamlined supply chain. Companies can oversee any challenges or areas that are resulting in profit loss.
In summary, reducing costs is a huge operation that every company is tackling especially when it comes to it’s supply chain. It is important to note that trying to save money as a company calls for focused and knowledgeable leadership that understands the end goal when considering supply chain management.