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Any effort at cost containment needs to begin with a realistic baseline. You cannot begin maintaining expense levels and minimizing unnecessary spending without knowing what your default costs will be for necessary practices and services. Lean Supply Solutions believes in an information-driven approach that captures a full picture of the costs associated with your supply chain. This includes material and product procurement, transport, storage, handling, quality testing and inspection, shipping, and other types of supply chain services. These numbers can then be crunched and parsed to develop a realistic picture of baseline expenses that can then be used as a launching point for deciding product prices and establishing your business's margins.
Shipping costs, both on inbound and outbound goods, are one of the more significant influences on your margins and have significant influence over how low you can reasonably make your prices. Unsurprisingly, a strong cost containment strategy will look for ways to reduce these costs and develop a leaner and efficient supply chain. This kind of philosophy is something that Lean Supply Solutions readily embraces with the Lean Methodology. Here are some of the ways shipping costs can be lowered during cost containment efforts.
Warehouse management software can be a godsend and enable swift and efficient tracking of goods. This allows for efficient allocation of resources and flow of activity. To get this result, however, it is important that your system is fast, accurate (real-time if possible!), user-friendly, and tailored to the needs of your particular type of product. When used properly, the right tech can give you end-to-end product visibility, even across multiple warehouses or channels.
Working on ways to streamline floor operations can directly lead to better fulfillment rates. There are a number of different ways this task can be achieved, such as physical rearrangement of the space to reduce required movement or using inventory tracking systems that offer real-time data and alerts. Finding ways to accurately track how much time each part of the fulfillment process takes will naturally help you identify areas of improvement and rates of progress in your goals.
Cross docking is the movement of unloading goods from one inbound source and then immediately moving them to an outbound one without any storage time (or costs) in-between. Inventory systems can help automate this process and serve as strong cost containment measures since cross docking eliminates storage, replenishment, and other types of labor costs.
Lean Supply Solutions is a third-party logistics order fulfillment and supply chain management company in Toronto.