Tips to Cutting Costs and Improve Customer Service in Supply Chain Logistics

Every supply chain logistics professional is constantly looking for ways to reduce costs and make the operation more productive. In today’s challenging economic climate, such efforts become even more crucial. Small steps that can help to save money may make a big difference. Our experience in supply chain logistics has been that often the same process improvements used to reduce costs also result in better service—and greater customer satisfaction. These are some of our top tips in supply chain logistics cost reduction.

Conducting an analysis of your current supply chain logistics operation can lead to big savings—essentially allowing you to increase capacity and space utilization without expansion.

Review Hiring, Retention and Turnover
Labor is your first or second largest expense after outbound freight in the warehouse. Review the reasons for attrition and work to reduce the turnover. Review hiring, retention and training practices. How well are you able to staff for the peaks?

 

Reduce Handling and Touches
The fewer touches of product there are, the less the cost of fulfilling and shipping an order. Streamline the supply chain logistics operation and apply industry best practices to reduce handling and touches.

Streamline Picking and Packing
Picking and packing labor in supply chain logistics amounts to more than 50% of direct labor expenses. Are you using the picking method that best matches your order profiles? Is your packing area engineered for productivity (e.g. convenience of cartons, inserts; variable height adjustments for pack tables; take away of packed cartons, etc.)?

Superior Slotting
Effective slotting practices can lower your supply chain logistics labor costs for picking, replenishment, and putaway.

Use What You Have More Productively
This is a mantra in supply chain logistics today. An assessment will help you get more productivity by optimizing your layout, increasing your space/product storage utilization and staff efficiency. If you are not caring for the basics of supply chain logistics, you are adding costs to the warehouse operation. Increase current capacity by utilizing that capacity more effectively.

Implement Performance Reporting
It’s true: "You can't improve what you don't measure." An effective measurement and reporting process can improve performance and lower costs.

Reduce Freight Costs
Conduct a freight rate analysis and contract review of your inbound and outbound carriers. Controlling inbound and outbound freight can make the difference between profit and loss for your business.

Bar Codes Are Better
Review how bar coding throughout the supply chain logistics, conveyance, material handling and warehouse management system can improve productivity, increase service levels and reduce costs.

Manage Your Inventory
Effective inventory control in the warehouse is the single most important tool to improve customer service and reduce cost in supply chain logistics.

Establish a Vendor Scorecard
Involve your Merchandising, Inventory Control, Supply Chain Logistics and Accounting departments to evaluate vendors. Include sales, margin, on-time delivery, significant problems, etc. Review several times a year with the vendors; possibly even set up a vendor recognition program for the top vendors.