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Supply chain costs- Profits for your company can rocket upward if you achieve sufficient savings in supply chain costs. It’s not uncommon for a concerted effort to yield annual savings of between US $2 million and $10 million, depending on the size of the company.
To achieve that degree of savings, though, you have to know where to look. As this article will discuss, there are seven areas that consistently offer opportunities for supply chain cost savings for businesses of all sizes and across all industries. Because these seven opportunities apply to almost every aspect of supply chain management, you can be systematic in your approach to improvement. This is important given the broad scope of the supply chain, which extends beyond your company to include both suppliers and customers. A systematic approach also is important because of the variable requirements supply chain managers must manage: big volume and small volume; large orders and small orders; frequent and less frequent deliveries; special handling needs; temperature control; city and country locations … and the list goes on.
Before you look at opportunities for supply chain cost savings, though, consider this: The scope and variability of supply chain activities means that anybody who is in business to make a profit needs to understand the “cost to serve” for the different types of customers and the different types of products and services your company provides to them. Here are just three examples that show how the supply chain cost to serve customers varies depending on the type of business:
Cement. Delivery of building products, particularly to building sites, is complex. Very often delivery times must be precise, as workers and equipment are booked for a specific time period to handle the delivery.
Supermarkets. Constraints often exist not only for delivery time, but also for the configuration of the product. Many supermarkets demand only one product per pallet.