How to Achieve the Best Way of Balancing Cost and Service
Finding ways to control supply chain costs without sacrificing service has become something companies seek to achieve as they look for ways to do more with less. Immense focus on reducing costs may impact the offer of service negatively. In this article we will find out how to achieve the best way of balancing cost and service. Here are six proven successful secrets to accomplishing that:
Make planning a priority
Careful planning and consideration needs to go into forecasting as it can give an idea in terms of labour, systems, transportation costs and storage. There needs to be time allocated into foreseeing ahead as predictability often drives more efficiency than increased volume. Expecting one-time events or seasonal spikes enables proper management of labour and space requirements, which allows better cost control.
Target lowest overall cost
Look at all factors that contribute to your total cost in order to identify potential savings opportunity and consider where you can make the most impact without sacrificing service. The way to do this is to rank your expense and analyse the biggest one first. Transportation is usually number one on the list for a lot of companies. Whether it’s optimizing cubic footage for shipments or pooling buying power for dunnage, small initiatives can pay big dividends.
Don’t over-serve customers
Never go overboard trying to satisfy customers. Instead find out what is important to them and tailor your service solutions to align with their priorities. For example, don’t send all shipments by express or next-day air if some of your customer base would be satisfied with two-day ground.
Make every cent count
Any capital investment made should present greater return on investment, growth and flexibility. Make use of third-party logistics (3PL) services to be certain about what you need before venturing into building a distribution centre for example or committing to a long-term lease. Even with technology investments, explore all options and be certain that what you invest in is what will benefit your business.
Build flexibility into your network
When assessing your distribution, keep in mind what changes might occur in the near future. The questions to ask yourself are – What if e-commerce becomes a priority? What if packaging or fulfillment capabilities are required? What happens when the business grows or shrinks dramatically? Get into partnership with distribution parties who can grow with you.
Always communicate with in-house associates and logistics partners and make sure they understand business goals and clearly state service expectations. In order to make effective recommendations for continuous improvements and cost savings there needs to be a clear understanding of priorities, so it’s always best to keep everyone up to speed.
See more of how to Reduce Your Supply Chain Spend with these 5 Essential Tips For Success!
Source: Inbound Logistics