Supply chains affect everything from customer satisfaction to profitability. With today’s logistics being more intricate than ever, there is room for error and money loss at every step. To compete with retail powerhouses, businesses must find ways to manage their supply chain efficiently, reduce costs and satisfy customers.
Reducing supply-chain expenses requires organizations to find efficient and affordable ways to procure, store, and distribute products. However, this goes beyond choosing the cheapest materials and carriers — to reduce supply-chain costs, they must take a holistic approach, addressing aspects from production to distribution.
Here are 10 ways to keep up with supply chain trends and cut costs in 2024.
1. Invest in Automation
Automation and robotics are changing the manufacturing landscape. By 2029, the industrial market is expected to grow to $395 billion. Many companies are turning to automation to:
- Streamline processes
- Reduce errors and labor costs
- Provide data to identify and address potential issues
Using automation, analytics and AI allows brands to gain visibility into their supply chain operations. With more data, operators can make choices that optimize processes, leading to savings. In addition, by investing in automated machinery to streamline repetitive tasks, employees can focus on more complex aspects of manufacturing.
2. Analyze Data
Collecting and analyzing data allows leaders to improve their supply chain by increasing efficiency and reducing prices. Leaders should gather and analyze data on key metrics such as supplier performance, inventory levels and transportation costs.
From this data, leaders can make informed decisions that lead to a more efficient and cost-effective supply chain.
3. Embrace Predictive Maintenance
When equipment breaks, it can lead to unexpected downtime and significant expenses. Implementing predictive maintenance techniques — such as IoT sensors and machine learning algorithms — allows manufacturers to predict when equipment will fail and fix it before a major breakdown. This approach ensures equipment runs smoothly, reducing repair costs.
4. Utilize 3D Printing and Additive Manufacturing
3D printing and additive manufacturing offer enterprises a cost-effective solution for prototyping and manufacturing products. By utilizing this technology, leaders can create complex parts with minimal waste, lowering material spending. In addition, this technology shortens production cycles, allowing for faster time-to-market and greater competitiveness.
5. Train and Leverage Staff
Workers handle the day-to-day operations, so ensuring they have the knowledge to do their jobs allows them to complete tasks competently. Investing in training programs will grow their skills and knowledge. A well-trained team member can adeptly operate equipment, troubleshoot problems and optimize processes, leading to higher productivity rates and lower operational costs.
Once an employee has become an expert in their role, leverage their knowledge. Talk to the staff who manage the supply chain and get their recommendations. They will know the ins and outs of processes, allowing leaders to dig deep into everyday processes.
6. Ship on Off-Peak Days
The day and time manufacturers ship products impact freight shipping prices. Sending products on days when customer traffic is low costs less than shipping on busy days.
When choosing a time to send off an item, consider a low-volume day like a Monday. This small change can lead to lower shipping spending overall.
7. Maximize Every Chanel
In the wake of major supply channel disruptions — like the problems arising in the auto industry supply chain — many businesses have begun to maximize every channel:
- Retail
- E-commerce
- Direct-to-consumer
- Distributors
By developing an omnichannel supply chain, companies ensure operations will continue even when one channel is interrupted, whether by a natural or artificial cause.
To take full advantage of this approach, consolidate demand across every channel and have a view into every point of supply. This approach will allow leaders to maximize service levels, grow revenue and minimize costs.
8. Maximize Space
Storing inventory comes at a price. If properly maximized, however, leaders can make the most of the space they have and reap many benefits. Maximizing warehouse space:
- Increases worker productivity
- Improves organization and flow
- Allows more room to store products
- Saves money, time and resources
To ensure that space is maximized, leaders should assess their current practice to see if there is a more effective way to utilize it. Some possible ways to optimize storage space include:
- Extending racks vertically
- Installing a mezzanine
- Reducing aisle width
- Changing storage medium
- Identifying underutilized space
- Storing seasonal items in trailers
If leaders can find ways to make full use of their space, they may find ways to store more items or downgrade to a smaller warehouse, saving money.
9. Switch to Just-In-Time Inventory Management
Lately, just-in-time (JIT) inventory management has been a buzzword. The goal of JIT is to have the minimum inventory necessary to meet demand.
To achieve this, leaders work closely with suppliers to ensure materials arrive just as production begins and no sooner. The benefits of JIT inventory management include:
- Waste reduction
- Improved efficiency
- Greater productivity
- Smoother production flow
- Minimized excess stock
10. Reduce Product Packaging
Packaging serves an important role when shipping and marketing something. It protects an item in transit and provides a notable surface to list a description. In addition, product packaging also impacts shipping costs.
Only so many boxes can fit together in a freight container or truck. If the packaging is large, shipping and unloading the product will be more expensive. To reduce shipping and printing costs, ensure packaging is as minimal as possible while still being able to protect products.
Cutting Supply Chain Costs in 2024
While supply chains keep getting more complicated, staying up to date on industry trends will help leaders find new ways to slash prices. Use these tips to leverage old and new technology to find a more efficient and cost-effective way to manage supply chains.
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