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April 2, 2023

Top 10 Tips to Reduce Your Supply Chain Costs

Top 10 Tips to Reduce Your Supply Chain Costs

by Tom K / Friday, 15 March 2019 / Published in Blog

Did you know that your business can increase profits even during times when you are not making sales? By optimizing your supply chain management in Toronto, you can experience cost reductions and improved processes that lead to increased revenue. One of the most tested and true methods to achieve these cost reductions is by working with a third-party logistics (3PL) provider. Their order fulfillment and supply chain services can help you reduce costs by focusing on your customer needs, improving supply chain performance, and adding automation and technology to your strategy to reduce errors and increase profits. Here are 10 tips to reduce your supply chain costs.

1. Focus on the Customer

The needs of your customers should be at the forefront of your mind when you consider your supply chain structure and strategy. However, many supply chains follow policies and systems that conflict with their customers’ requirements. As a result, these companies deal with frequent customer issues and complaints, and additional costs that are unnecessary. If you focus on your customers by offering options like next-day delivery or unlimited free shipping with a paid monthly membership, you will provide the solutions they want and be more effective as a business.

2. Supply Chain Strategy

Creating an effective supply chain strategy will help you frame your goals and be more efficient. Your supply chain’s performance should be evaluated on a regular basis to ensure you are meeting your customers’ requirements and staying on top of your goals. An effective strategy should meet the following criteria:

  • Be clearly documented and understood
  • Involve all areas of the company (sales and marketing, research and development, purchasing, manufacturing, logistics, etc.)
  • Address and resolve customer dissatisfaction cases to prevent recurrence
  • Meet the needs of the customers and the business
  • Be clear and precise to allow for quick decisions and improvements

3. Make Better Use of Space

It costs to store inventory and supplies in your warehouse, so you should make it part of your plan to make the most of this space. Take an assessment of your warehouse and decide whether you are achieving this goal. If there are ways to reorganize your inventory, you may discover that you can save money and be more efficient in the way you use your space.

4. Sales and Operations Planning

Sales and operations planning (S&OP) are required for a supply chain to operate at its highest efficiency. Optimal performance depends on proper planning, but it can be expensive and complicated. When you work with a 3PL provider, the team will eliminate waste and redundancies, help you plan better through data analysis and forecasting, and increase visibility so everyone involved is up-to-date. The following problems, if they exist, should be addressed in the S&OP process:

  • Uncontrolled SKU generation
  • Frequent and unrestrained stockouts
  • Commonly inaccurate forecasts
  • High quantities of slow-moving or obsolete inventory
  • Consistently adjusting demand and production schedules due to issues

5. Supply Chain Network Design

Supply chain network design involves reducing costs and increasing reliability to minimize product handling. Each “touch point” between your supplier and your customer raises costs and increases the risk of error and damaged products. A poorly designed network can lead to excessive handling, too many stock locations, and an inadequate use of your distribution locations. As a result, you will experience high distribution costs and poor customer service. Revising your supply chain network design will require special software and analysis that can be costly and confusing to manage on your own. This is yet another reason why it saves to work with a 3PL partner. They have the software and experience necessary to resolve issues in your network by designing an effective plan.

6. Move Supplies Faster

A 3PL provider can help you find ways to speed up shipments from suppliers so you can order closer to when you need items. When inefficiency causes you to order in advance, you can incur warehouse costs because you will need space to store these items when customers order them. Additionally, you run the risk of losing or damaging stock because they sit around in the warehouse. By outsourcing your warehousing and distribution, you can shorten the time it takes you to get items from your supplier to fulfill customer orders.

7. Automation

One of the biggest benefits of working with a 3PL provider is access to automation software. Automation can help you reduce supply chain costs and make your operations more efficient.

8. Outsourcing Supply Chain Operation/Management

Outsourcing your supply chain management to a 3PL provider will help you improve performance while reducing costs. Warehousing and transportation are two of the most expensive aspects of your supply chain and an outsourced partner can provide more cost-effective and skilled services. By outsourcing, you will receive these benefits:

  • Reduced costs
  • Rapidly access services and resources
  • More resourcing flexibility
  • More opportunity for cost-effective growth
  • Access to specialized services, technology, and equipment

9. Utilizing Assets

Evaluating your assets and usage to find areas that need to be improved is one of the most straightforward ways to improve your supply chain performance. Supply chains are complex systems, so finding ways to increase efficiency and reduce errors is vital.

10. Track/Measure Performance

The next step to reduce your supply chain costs is to track your results. Observing your key performance indicators (KPIs) will help you determine realistic targets and set trackable steps to reaching those goals. Performance tracking will also help you accurately forecast for base supply, logistics, and stock renewals.

Reduce Your Supply Chain Cost with Us

Working with a 3PL provider can help you reduce costs that keep your business running so you can keep making profits. With their experience in strategizing the supply chain, they can manage all the tasks above so you can focus on your core responsibilities like sales, marketing, and customer service. A 3PL provider will also offer you many advantages such as supply chain management software and technology that increase visibility and communication between you and everyone in your network.

If you are looking for the right company to partner with, Lean Supply Solutions is the answer. We rise to the challenge of meeting our clients’ needs through our services which include product fulfillment, warehousing and distribution, e-commerce fulfillment, warehouse pick and pack, order fulfillment, and more. To learn more about outsourcing your supply management in Vancouver or Toronto, or to ask any questions, contact us today.

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About Tom K

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