No matter what size your business, reducing unnecessary supply chain costs can result in a significant savings – assuming you can accurately identify and efficiently address the weak links.

Anyone who works in Cleveland supply chain management service knows that all for-profit companies are going to incur a “cost to serve.” But is your company’s “cost to serve” reasonable? Can you lower it without risking a major blow to quality or customer satisfaction?

Supply Chain Loopholes Vary by Industry, Service, Location

The answer will depend a lot on the type of product or service you provide. For example, let’s say your Cleveland supply chain involves the packaging and delivery of building products to construction sites. Not only are you managing a complex schedule thanks to the heavy equipment and various contractors involved – your deliveries MUST be precise and on time. Certain materials like mixed cement can be totally wasted if there aren’t workers on site. If elements like weather are consistently a problem in one region, you may need to consider whether you can re-route around that area altogether. If you are in the grocery or restaurant industry, it will be critical that your deliverables be properly packaged, sometimes limited to one product-per-pallet and that delivery dates and times are accurate to the minute – otherwise the shipment could be unusable.

Understanding not just your industry but also your customer base is priority No. 1. You need to be able to serve their needs, but also make sure the cost of doing so is still sensible. One analysis in the International Journal of Production Economics found in supply chain cost reviews by 30 companies in 10 different industries, most were falling short when it came to the estimated standard supply chain cost compared to actual cost.

One of the best ways to cut your Cleveland supply chain costs is to work with a dedicated third-party logistics partner. On Time Delivery & Warehouse 3PL providers can help you better pinpoint what exactly in your chain of supply is causing you the biggest headaches and cost bleed-out. Despite wide variances between industries and companies, there are a few supply chain our third-party logistics professionals have seen consistently cause problems. If any of these issues sound familiar (or you’re having trouble identifying exactly which supply chain loophole is costing you most or what to do about it), a third-party supply chain management team can be an invaluable resource.

Key Cleveland Supply Chain Cost Saving Areas

Strategy. Once you have a clear handle on the needs of your customers, you have to make sure you have a supply chain strategy that is both documented and understood by all involved parties. If your current supply chain strategy is solely focused on manufacturing and purchasing, but fails to also involve logistics, development and sales, you’re going to come up short. Your Cleveland supply chain strategy must be able to evolve, adapt and be flexible. It’s only once you have a smart system in place that you can start to consider whether you’re unnecessarily shelling out money on contributions that aren’t truly helping.

Sales and operation planning. This is the way in which the people involved are structured to share information in a systematic chain that is clearly understood by all involved. It’s not necessarily all about costly software or extremely complex algorithm. Reality is if your sales and operation planning aren’t thoughtfully mapped, not even the highest-end technology is going to help. Indications of problems with sales and operation planning may include lots of slow-moving obsolete stock, regular alterations to your demand and production schedule, constant stock-outs or failure to accurately forecast the need. Solutions may be relatively simple or complex, depending on the nature of your industry and current operations, but a capable third-party logistics manager can help address this to improve and expedite stock turns, sales and profits.

Network design of supply chain. If you have a supply chain network that is unpredictable or unreliable, the less service continuity your customers can count on. For instance, if you have a number of suppliers (or one key supplier) who is far away, that could result in problems with order fulfillment because you’re ultimately going to have more product handling. The more touch points between the supplier and customer, the more potential for damage and error – which increases your costs. A 3PL with a well-tested supply chain network design can help lower the risk of poorly-utilized distribution centers and excess handling of your products.

Failure to outsource supply chain functions. We don’t say this solely because we are a third-party logistics provider. We say it because we’ve seen in practice how businesses can suffer in insisting on keeping all operations in-house to save a few bucks, but it ultimately costs them more in the long-run. Outsourcing warehousing and transport in particular is something many companies find beneficial. This is especially true if your firm is fast-growing, and you a better means of acquiring technology, space or other resources.

It’s been our experience that when companies make it a point to reevaluate their supply chain management – especially those not currently outsourcing – they usually find at least one or two areas in which there are substantial cost savings.

If you have questions about Cleveland Supply Chain management, contact On Time Delivery & Warehouse by calling (440) 826-4630 or sending us an email.

Additional Resources:

Measuring supply chain cost, June 2013, International Journal of Production Economics

More Blog Entries:

Supply Chain Management Statistics That Might Surprise You, June 30, 2018, On Time Delivery & Warehouse Cleveland Supply Chain Management Blog