Easy-to-Implement Strategies to Reduce Operational Costs Across Your Supply Chain

Reducing operational costs across your supply chain doesn't mean compromising on quality, efficiency, or speed. Our Unique Excellence team has on numerous occasions worked with its clients to make a direct financial impact across the various supply chain components. Below we have listed some practical strategies you can implement at each stage to achieve cost savings while maintaining a high-performing supply chain:

1. Procurement

• Leverage Bulk Purchasing: Consolidate purchase orders to negotiate better rates with suppliers. And if you can't consolidate your purchase orders, look at similar purchases that you can potentially bundle under one supplier, creating volume.
• Implement Strategic Sourcing: Use your data to identify the most cost-effective suppliers based on performance and reliability. Every business has this data, it's important to transform this data into information, allowing you manage your suppliers.
• Automate Procurement Processes: Use solutions like Robotic Process Automation (RPA) to eliminate non-value-add, repetitive processes, allowing you to streamline purchase ordering, approval workflows, and invoice matching processing.

2. Inbound Delivery

• Optimise Freight Management: Use a freight optimisation solution, or work with partners, to select the most cost-effective shipping routes and carriers. This will also have a direct impact on your sustainability efforts, this is why we often combine cost and sustainability in our freight optimisation solutions.
• Consolidate Shipments: We have introduced a solid Sales & Operational Planning model that enables our clients to forecast their inbound shipments, and therefore combine multiple smaller shipments into one to reduce shipping costs (and again sustainability impact).
• Negotiate Freight Rates: Our UE team strongly believes in establishing long-term supplier relationships. This should be extended across your carriers and 3PL partners, as we have found that these long-term relationship more often than not result in better rates and services.

3. Warehouse and Inventory Management

• Implement Just-In-Case Inventory: Although there is often a focus on Just-in-Time Inventory, we strongly advocate for Just-in-Case Inventory, as we know that due to natural disasters, economic issues (tariffs, etc.) and potential health challenges, supply chains can be directly impacted. So, reduce your inventory holding costs by aligning your sales orders with your production/ assembly schedules and/ or procurement schedules.
• Use Warehouse Management Systems (WMS): Automating your warehouse operations should be a no-brainer. There are many WMS solutions on the market and they all will deliver you a benefits case. Understand what you're looking to achieve with a WMS, e.g. better product flow-through, FIFO model, etc. as WMS solutions will increase your inventory accuracy and reduce your labour costs.
• Enhance Layout and Storage Solutions: Optimise warehouse layout for efficient receipting, quality control, storage, and picking and packing. Use the correct racking, like vertical racking to maximise space utilisation. But, before purchasing any storage solutions, attract a warehouse flow-through specialist (contact us) to design the warehouse, as it will most definitely provide a return on your investment.

4. Outbound Transport

• Optimise Load Planning: Use load planning solutions - or partner with a 3PL service provider that focusses on this - to maximise truckload efficiency and minimise the number of trips. This doesn't only meets your sustainability efforts, but will directly positively impact your costs
• Utilise Cross-Docking: If you have a solid Sales & Operational Planning process, then you're able to plan your customer orders and your supplier orders. This will then allow you to transfer products directly from inbound to outbound transport, reducing storage time and handling costs. A prerequisite is to have a well-established S&OP model in place.
• Implement Route Optimisation: Use GPS and/ or route planning solutions to minimise travel distance and fuel consumption to your customers.

5. Last-Mile Delivery

• Deploy Local Fulfillment Centers: Either lease your own fulfillment centres or partner with 3PL service providers to shorten delivery distances to your customers. We have even introduce incentives with our customers to order before a certain date, allowing us to use these local distribution centres more effectively.
• Optimise Delivery Schedules: Work with your customers to introduce (discounted) batch deliveries to the same area to reduce travel time, CO2 impact, and fuel costs. Why wouldn't your customer benefit from this as well?
• Use Delivery Management Software: Improve delivery efficiency and customer communication through automated scheduling, real-time tracking, or re-directing services. This flexibility will allow your customers to optimise their own warehouses, which will ultimately benefit both.

6. Ultimate Customer Receipt

• Improve Packaging Efficiency: Use cost-effective, sustainable packaging that protects products while minimising material and shipping costs.
• Enhance Customer Communication: Customer communication can not be underestimated. Provide real-time updates and transparent communication to reduce customer service costs and improve satisfaction.
• Streamline Returns Management: Implement a reverse logistics model that substantially increases an efficient returns process to minimise handling costs and restocking time.

Additional Tips for Overall Supply Chain Efficiency

• Invest in Feedback: Best feedback will come from your front-line staff members that deal with the various processes. They will know what works and what doesn't. Creating informal and formal feedback loops will be critical to increase your overall supply chain effectiveness.
• What Gets Measured, Gets Done: Don't just analyse all data, but introduce KPI's that matter, and analyse the trends on this. When you measure your supply chain, then you can take action in achieving your efficiency targets, cost savings, etc.
• Foster Supplier Relationships: Supplier Relationship Management is not just a sentence, it's critical. Collaborating closely with suppliers will improve terms, lead times, and reliability. This will translate into cost savings.
• Implement Sustainability Initiatives: We have developed our ESG Custodian solution that focusses on allowing you to implement financially-viable sustainable practices, behaviours and ways-of-working to reduce waste, energy consumption, etc. The focus of our solution is to deliver sustainable benefits, while also allowing you to deliver your financial targets.

By integrating these strategies into your supply chain operations, you will achieve significant cost reductions without sacrificing quality, performance and a negative sustainability impact.

Remember, the key is to measure and adjust processes to ensure ongoing efficiency and effectiveness