Your business can increase profits without increasing sales. You do this by reducing your supply costs. This can include the supplies themselves and the cost of shipping, storing and retrieving them. This is known as the supply chain. You can keep supply chain expenses down by managing every phase of the supply process. Break the chain down into its essential elements, and you can see ways to make it work more efficiently.
Improve Space Utilization
It costs you money to keep supplies and inventory in a warehouse. If you conduct an analysis of how well you are using your storage space, you may find that you are paying for too much space. You may also be wasting money paying personnel to search for stored items. A more efficient storage strategy could reduce the amount of space you use and the amount of time it takes to find and pull items. This could result in reduced rent and payroll costs.
Use Multiple Suppliers
If you only use one supplier, you are eliminating competition for your orders. Find several suppliers who can compete on price, and use several of them at all times so you can avoid costly delays in receiving products. If one supplier is out, another may have the items. Using multiple suppliers protects you from spending money for less-than-satisfactory service.
Move Supplies Faster
If you can find ways to expedite shipments from suppliers, you can order closer to the time you need the supplies. Ordering far in advance can incur warehouse costs, because you have to store them so that they'll be available, and products are more likely to get lost or damaged. In addition, examine whether you can shorten the time it takes you to transport supplies from where you receive them to where you need them. Transportation from the supplier and within your company can add days or weeks to your supply chain and increase costs
Review Customer Demand Patterns Frequently
You may have established your supply needs based on a pattern of demand that is outdated. It can be cost-effective to evaluate customer-demand patterns frequently to see if your seasonal and even monthly assumptions hold up. Adjust your supply ordering based on your most recent evaluation, and you will be ordering in a way that's more closely tied to what you really need to have on hand. You can still keep some safety stock in case your assumptions are wrong, but there is no need to stock up for demand that never materializes.
Streamline Your Ordering Process
Part of your supply chain costs come from your ordering system. If you have multiple people filling out requisitions, using multiple software or even paper checklists, you could be over-ordering. In addition, if there's no approval process and individuals have the power to order supplies whenever they want, you could be ordering things you don't need. Examine your ordering process to see if it is causing waste.