In order to reduce supply chain costs, one of the concepts that many warehouse managers have utilized in recent years has been "just-in-time," but this concept has become heavily questioned in the wake of supply chain disruptions that have rocked the economy over the last few years. These just-in-time tactics seemed to falter during the global supply chain crisis, and there are many who still question the merits of using this concept even after the supply chain has mostly stabilized. That being said, every company out there still wants to consider how they can keep their supply chain costs contained.
We will look at how improving your inventory management, increasing transportation efficiency, reducing waste, and implementing continuous improvement programs can lead to greater financial success and ultimately improve your distribution center's operations and bottom line overall without sacrificing quality.
Streamlining Inventory Management
As we have already mentioned, just-in-time supply chain strategies have been called into question. However, there are still upsides to the just-in-time supply chain inventory management tactics that make them worth considering. The advantage of this is explained in the following way:
Just-in-time inventory ensures that there is just the right amount of inventory to produce only what you need, when you need it. The goal is to achieve high production volumes with minimal inventory on hand, thus increasing efficiencies and eliminating wastage.
Keeping waste to a minimum and ensuring that only the exact amount of inventory that you need on hand to meet your needs keeps costs contained and makes a business as productive as possible.
Improving Transportation Efficiency
Getting products from Point A to Point B is another part of the process that can prove quite costly for many companies. Improving transportation efficiency is a way to cut down on costs and make sure that prices are kept within reason.
With that in mind, what are some of the ways that you can improve transportation efficiency?
- Route Optimization - Laying out the best routes to deliver all materials to where they need to go in the least amount of time and mileage is extremely helpful. Remember, every extra mile and extra minute spent on the road costs money, and that should be cut down as much as possible.
- Fuel-Efficient Technologies and Vehicles - Consider an investment in fuel-efficient technologies and vehicles to cut down on the amount of gasoline that you are purchasing for your fleet of vehicles. Reducing the amount of fuel that must be used cuts down on a direct transportation costs and therefore reduces supply chain costs overall.
- Work with a 3rd Party Logistics Company - Weigh your option to work with a 3rd party logistics company to plan out your routes and help you find the most efficient and effective ways to get your products where they need to go more efficiently.
You can use any combination of these strategies to improve your transportation efficiency and bring down your supply chain costs.
Reduce Waste
Work should only have to be done once. Repeating the same workload over and over again is wasteful and means that something is wrong with the way that you are doing business.
An important practice is to perform an audit of the work that you do to make sure you cut out some of the wasteful aspects of the way that you do business. Those audits should identify where there are weaknesses in how you do business and help you put the clamp down on those wasteful practices.
In addition to performing audits on your business practices, you also ought to train employees in the ways that they can reduce waste in the work that they do as well. They will be happy to learn about how to reduce waste in their work because they don't like to have to keep redoing things that they have already done. Keep them informed about best practices for keeping waste under control, such as optimizing their movements around the warehouse through efficient layouts and flows, harnessing advanced technology like barcode scanning, and creating systems that keeps employees motivated will help you work together as a team to keep costs down.
Implement Continuous Improvement Practices
Don't forget that you should always strive to continue to improve the practices that you use to grow your business. You must always strive to continue to learn and improve. You can take the real-time data that you receive from your strategies to implement new practices that can work even better for you going forward.
Set up a system of performance reviews for employees to identify those who are doing their work well and those who need to focus on improvement. Put the spotlight on both those who are managing their workload well and provide incentives for those who are improving. Giving them some motivation to continue to work towards being the best version of themselves will benefit everyone.
Strategies for improving these processes include providing competitive compensation and benefits for all workers. This can improve your retention rates and make it easier to keep everyone pulling in the same direction and getting things done within your warehouse. Additionally, you should consider implementing training procedures to provide your workforce with the latest and greatest information that they require to do their job as effectively as possible.
Eclipse IA Helps Client Reduce Costs
Eclipse IA has helped our clients reduce supply chain costs for decades. We have time-tested systems and processes in place that help warehouse managers get rid of waste throughout the workplace, and we help them find custom solutions that are catered just for them. For example, Eclipse IA has helped clients replace costly third-party port services without creating too many disruptions in their supply chain workflow.
Take a Holistic Approach to Supply Chain Cost Reduction
It is so important to take a holistic approach to reducing your supply chain costs. Take all of the strategies mentioned above and put them into play. Everything from optimizing your transportation routes to setting up employee incentive plans to continue to improve across the board is what will make the difference in the long run.
Questions have arisen in recent years about the best way to operate a supply chain, and we need to continue to ask those questions. Now you have more information about how to make things work out better for yourself and your customers.
Eclipse IA can help you bring these strategies to life by offering you the opportunity to hire qualified and motivated supply chain workers in your distribution center who can assist you with the work that must be done. Team up with Eclipse IA so you can reduce waste, improve margins, and create better bottom line results across the board.
