How Leaders Can Cut Supply Chain Costs And Improve Performance
2023-04-25 23:59
Efficient supply chain management is a crucial element of business success, impacting everything from customer satisfaction to profitability. With the global supply chain becoming increasingly complex, organizations are under increasing pressure to streamline their operations and find ways to reduce costs. However, improving supply chain performance requires more than just cutting costs. It requires a holistic approach that addresses every aspect of the supply chain, from sourcing and production to logistics and distribution.
Below, a panel of 14 Forbes Business Council members share effective ways leaders can enhance their supply chain operations to reduce costs, enhance efficiency and drive business growth.
1. Conduct Know Your Customer Checks
Break down the whole value chain process into its components, both for yourself and for your client. Tackle the difficulties and bottlenecks on behalf of your customer, executing the deal as clearly as possible. Let me be practical here: In a grain trading business, our operational teams carry out Know Your Customer (KYC) checks, quality control, logistics and financing so that the deals are secure and hassle-free for our partners. - Egor Kirin, Agro.Club Inc.
2. Analyze Data On Key Metrics
Leaders can improve their supply chain and increase efficiency while reducing costs by adopting a data-driven approach. To implement this approach, leaders need to gather and analyze data on key metrics, such as supplier performance, inventory levels and transportation costs. This enables leaders to make informed decisions based on data, leading to a more efficient and cost-effective supply chain. - Aditi Soni, Trust Cosmic Immigration Consultancy
3. Use Advanced Analytics To Identify Inefficiencies
Implementing data-driven solutions, such as using advanced analytics to identify inefficiencies, optimizing inventory management and establishing strategic partnerships with suppliers can help to reduce costs and improve delivery times. - Salvador Ordorica, The Spanish Group LLC
4. Implement Data-Driven Solutions To Increase Efficiency
Leaders can improve their supply chain by implementing data-driven solutions, such as automation, predictive analytics and real-time tracking, to optimize inventory levels, reduce waste and lead times and enhance supplier collaboration. This can result in lower costs, better efficiency and improved customer satisfaction. - Justen Arnold, Flexx Mobility & Performance LLC
5. Utilize A Circular Supply Chain Model
A circular supply chain is a model that addresses this goal by encouraging product manufacturers and sellers to take discarded materials and remake them for resale. It prioritizes product recovery and reuse over the traditional “take-make-waste” approach. First used by Renault in 1949, this model uses reusable and recycling methods to avoid wasting materials when they can be used to make something new. - Eric Collins, Montage Connect
6. Consolidate Shipments For Lower Operational Costs
Optimize shipping and transportation costs. Getting products to the end user is often the most expensive part of the process. Finding ways to consolidate shipments or decrease frequency will lower your operational costs and free up your staff to focus on value-adding tasks. - Chase Flashman, ShipSigma
7. Leverage Technology
One key strategy for leaders to improve their supply chain is to leverage technology like supply chain management software. By automating processes, providing real-time visibility and improving communication, leaders can reduce costs and improve efficiency throughout the supply chain. This can lead to better inventory management, faster delivery times and increased customer satisfaction. - Dustin Lemick, BriteCo
8. Utilize Digitalization
I would consider digitalization as a holistic approach, as it enables the automation of routine processes, leading to increased stability and reduced costs. Additionally, it enhances transparency, shedding light on problem areas and bottlenecks. It also fosters stronger relationships with suppliers, ultimately resulting in more favorable terms. - Vladislav Kraynov, MSOFT
9. Collaborate With Strategic Partners
Delays are costly to the intangible wealth of relationships and detrimental to shipping costs from long-distance suppliers. Alignment with strategic partners in closer proximity may further aid in reducing costs and streamlining breaks in supply due to the complexities being faced in the supply chain now. Real-time tech that is able to assist in this along with other gaps adds another layer for improvement. - Paul L. Gunn, Jr., KUOG Corporation
10. Analyze Historical Data
With a data-driven approach using analytics tools, leaders can analyze historical data to identify inefficiencies in their supply chain. New technologies, such as automation and artificial intelligence, are another way to streamline processes, optimize inventory level and reduce costs. Correlating the results with the insight of the production team is an important factor to know what works best. - Udi Dorner, SetSchedule
11. Administer Direct And Indirect Procurement Diagnostics
Run direct and indirect procurement diagnostics to evaluate and reduce unnecessary spending via a reduction in the volume of orders and renegotiations. Evaluate make versus buy options, considering all options from 3D printing to substituting with more readily available materials. Evaluate hub and spoke models with inventory optimization models in place for quantities and distance to minimize travel time and availability. - Benito Piuzzi, Lakeview Loan Servicing
12. Adopt Technology And Automation
Leaders can improve their supply chain and reduce costs by adopting technology and automation. AI-based inventory management, blockchain-based tracking and autonomous robots can optimize the entire supply chain, minimizing errors and improving efficiency. This approach also frees up resources and time to focus on innovation and strategic planning, maximizing returns. Work smart, not hard. - Chris Kille, Payment Pilot
13. Talk To Your Team
Great leaders leverage the experts they've hired. Talk to the people who actually manage your supply chain and ask them to make recommendations. They should know the specifics of these processes better than you, so lean on them and their expertise to refine your processes in meaningful ways rather than what you see on the surface. - Ty Allen, SocialClimb
14. Invest In Automation To Streamline Processes And Reduce Errors
Invest in automation that can streamline processes, reduce errors and labor costs and provide real-time data to identify and address potential issues before they become costly and time-consuming. By leveraging automated processes, analytics and AI, companies can gain visibility into their supply chain operations and make informed decisions that can lead to optimization and cost savings. - Johan Hajji, UpperKey
15. Conduct A Cost-Benefit And SWOT Analysis
Do a cost-benefit and SWOT (strengths, weaknesses, opportunities and threats) analysis of whether you should outsource something or try to do it in-house. If you will outsource it, will it be somewhere nearby or offshore? There are many factors regarding how and where, but the very first decision you need to arrive at is whether the material is core to your business or something that can be outsourced. - Zain Jaffer, Zain Ventures