5 ways to find hidden savings in your supply chain
Taking control of your supply chain can cut transportation costs by up to 35 percent.
Significant savings often can be found by examining your existing supply chain. “Less than half of our customer base actually takes control of their supply chain in its totality,” says Matthew Hanna, a marketing director with UPS. “That’s a shame because it’s one area where customers can save money.” In fact, taking control of your supply chain can cut inbound transportation costs by up to 35 percent.
So, how can you save money and improve your bottom line? Start with these steps:
1. Assess vendor transportation costs. UPS marketing manager Dana Caron recommends thoroughly evaluating shipping costs. These usually are itemized on invoices from your vendor. “What we often see is that many [businesses] are unaware of how much they’re paying in these costs,” Caron says. “Vendors don’t always make these costs apparent, nor in many cases do they find the most cost-effective transportation options.”
2. Take control of your inbound costs with a logistics partner. “Having a logistics partner that can manage all your transportation needs is important,” Caron says. “UPS, for example, will match your delivery deadline needs with the most cost-effective transport options available.”
How it works: instead of the vendor billing you for the costs, the vendor contacts UPS to handle the shipment. Doing so allows you to monitor service choices and leverages your purchasing power.
For example, you may not need the materials you ordered until next week, but if your supplier always ships air freight instead of sending it LTL [less than truckload] freight, you may be overpaying for your shipments. When you use only the speed you need, you operate more cost effectively.
3. Gain discounts through volume shipping. “The first thing you absolutely have to do is, you need to start using your account number for your shipments and take advantage of freight collect,” Hanna says. “Start with your top three or four vendors. Let them know that shipments must be charged to your account number. Now you’re building toward volume discounts.”
4. An integrated system can help tackle the unexpected. Managing inbound logistics through a single integrated network doesn’t just trim procurement costs. “It helps with overall operation, as all functions have supporting logistical needs,” says Caron.
With access to our global network, it’s also easier to take advantage of sourcing opportunities in emerging markets. “With UPS, you can even track the whereabouts of shipments outside of our network, as is sometimes the case in different [global] markets,” Caron says.
5. Plug everyone into the loop. If your sales staff can see only what’s in stock right now, all they can communicate to customers is whether a product is available right now. But if they have visibility of inbound shipments as well, they can sell into the future. The next customer service call might go like this: “We don’t have any of those in stock right now, but our next delivery is scheduled for tomorrow. I think I can fulfill your order the day after.” That translates to greater customer satisfaction.
By understanding that logistics is at the core of the business, taking charge means more than saving money, says Caron: “It’s an important part of your competitive strategy.”