6 Ways Your Business Can Cut Costs and Gain Value
There is no doubt that this is a trying time for most businesses - and especially those in manufacturing. Manufacturers are dealing with increased stress and pressures related to the workforce on top of the added challenges of materials sourcing and logistics capacity. In this industry, working remotely is simply not an option for many producers of goods and there is a lot of empathy to be felt for a business owner in any production vertical.
So while the economic landscape is in flux and everyone is feeling the pressure, one of my main priorities, as a business owner, is to review our costs and HOW we buy our services. What kind of value are we getting from the vendors we look to for services outside our core offerings?
Most organizations evaluate and answer this question when they perform financial reviews. However, due to the current fiscal strains on our markets, we owe it to our companies to assure that the ways we procure and buy products and services are aligned with our short- term and long-term goals - not just a way to quickly cut costs.
One of a manufacturer’s biggest expenses is is the supply chain. The opportunity to uncover cost savings AND increase the value-add has never been more necessary for today’s suppliers of goods. So here is why you need to review your supply chain strategy…
Evaluating your Supply Chain Strategy Can Lead to:
1) Reduced overhead costs
You can reduce overhead costs by more accurately predicting demand. This can reduce or eliminate expenses such as warehouse fulfillment costs, where you are spending unnecessarily.
2) Improved cash flow
You can improve your cash flow by choosing to work with a qualified partner. This will enable you to invoice (and receive payment) sooner and minimize disruptions, resulting in improved customer satisfaction.
3) Improved quality control
You can improve your quality control by implementing guidelines for your suppliers to which they must adhere. You may want to implement a system to monitor the key performance indicators (KPI) associated with their vendors and suppliers to make the best choices.
4) Increased efficiency rate
When real-time information, such as the availability of raw materials, is available, companies can make better cost-savings decisions and proficiency in the data integrity increases. Therefore, you can make better-informed decisions and be nimble to change.
5) Shipping optimization
You can optimize your shipping methods by exploring the most efficient method for each type of order and scenario. This can help products be delivered quicker and can minimize costs. Those cost-savings can be passed through to customers and increase their satisfaction.
6) Better risk mitigation
By looking at the bigger picture, companies can obtain a better understanding of the risks and allow them to create backup plans. In fact, 87 percent of companies believe that they could reduce their inventory by 22 percent if they better understand their supply chains.
These are just a few of the advantages of an efficient supply chain that adheres to an effective strategy.
The time is now to have a healthy and well-maintained supply chain. Put some time into assessing and reviewing your current procurement processes and the holistic value these services provide for your organization. If you give your supply chain the proper time and attention now, it will continue to circulate properly, never break down, and treat you to great benefits and growth into the future.
If in doubt, talk to your outsourced partner and ensure you have a plan that fosters the fruition of the aforementioned benefits.