One of the most basic rules of business management is always to ensure that your outcome never exceeds your income. This is so fundamental that it often goes unsaid, however, it is something that must always be kept in mind.
Successful business owners are continuing to learn new ways and strategies to keep themselves firmly in the black and new methods by which they can cut costs without cutting services. One thing to look at, therefore, should be your supply chain and how much money is spent on it. This is especially true in today’s economy and the ever fluctuating prices of oil and gas. After all, if it costs more to transport something than you can get through sales, is it really worth the expense?
First, try to divide all the factors that can influence the cost of your logistics into three main categories:
- Things you can control, for example, the quantity of cargo you want to transport.
- Things you can’t control but can manage, such as the surcharge increase from carriers.
- Things you can’t directly control, but can influence. The cost of oil, for example, is pretty much fixed, however some companies may be willing to adjust the price to a given price lock.
Keeping these things in mind can help you develop strategies on how improve the cost efficiency of your supply chains and logistics teams, largely by giving you an idea what you can change and how to cope with the things you can’t. After all, there are going to be events that are outside of your control. All you can do is to ensure that they do not upset your overall running more than it needs to.
To help you start off, here are a number of ways you can reduce supply chain costs. For example, try to centralise your decision making so that you are in direct control of how your logistics chains run. Relying on the judgement of individual shipping sites may result in decisions that cost you more in the long run.
Then consider your cargo itself, just how much does your packaging consist of air? Make sure that your containers have as little excess space as possible, so it may be worth re-examining your packaging. Likewise, ensure your carton and crate sizes making the most of their available space. Do not use three small crates when two slightly larger crates will do.
It may also be an idea to look to your neighbours for help.Sharing transport costs will not only save you money, but also earn you good relationships with companies around you and those connections can seriously pay off in the long run.
For further advise and long-term planning, it may also be an idea to look at supply chain consultants. Having a friendly professional who can give you insightful advice into your supply chains can be invaluable and pays for itself quickly.