Any tips for how to reduce end-to-end supply chain costs while not sacrificing quality?
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CPO in Retail2 years ago
The overall costs may vary based on various factors - for example, temporary disruptions, macroeconomic changes, fuel costs, supply/demand disruptions, labor disruptions, etc. Early technology adoption focused on visibility from the first mile to the last mile providing Order Progression, Inventory Movement, and Financials Analysis, which can provide insights and help reduce costs through analysis, continuous improvements, and optimization. Chief Supply Chain Officer in Educationa year ago
Here are some tips to reduce end-to-end supply chain costs:Embrace automation: Improved IT systems and automation can help reduce supply chain management costs in terms of both data processing and operational costs. Automation does not require a significant investment in robotics.
Implement sales and operations planning tactics: This can help you better forecast demand, optimize inventory levels, and reduce stockouts. I would recommend this course to learn from basics to advance implementation (https://www.scmdojo.com/academy/courses/how-to-run-a-sop-process-benefits-process-steps-overcome-barriers)
Manage shipping and transportation costs: You can reduce transportation costs by consolidating shipments, optimizing routes, and using more efficient modes of transportation.
Reduce touchpoints for order processing: This can help you reduce labor costs, improve order accuracy, and speed up order fulfillment.
Consolidate suppliers: Companies may be able to reduce costs by consolidating their supplier base, which can help to streamline the procurement process and negotiate better terms with fewer suppliers. This blog of supplier segmentation will help https://www.scmdojo.com/supplier-segmentation.
Leverage technology: Companies can also use technology to improve their supply chain operations and reduce costs.
I hope this helps!
Supply Chain Benchmarking & Intelligence, Program Manager in Manufacturinga year ago
The global economy and general way-of-life depends on semiconductors so we cannot subvert quality for the sake of cost in any event. However, we are looking at procurement a little differently today than we did before the pandemic. We are partnering more with our suppliers to bring more innovation to Intel vs. just relying on negotiating price, volume, and mix.Innovation equals value-add and comes in many forms. Our supply base could help us improve specs for the products we buy, increase productivity by adding new modules for software, or streamline processes with new manufacturing tools.
We also use strategic sourcing to help reduce overall supply chain costs. We work with the supply base to craft pricing clauses that guarantee us the best price. We also negotiate longer contracts or different types of contracts with other non-traditional licensing agreements.
Lastly, we use center-of-excellence (CoE) models in parts of our supply chain where we can reduce and streamline redundancies in function and/or process. For buyers, contract management, program management, etc.
Digital Transformation Lead in Manufacturinga year ago
Automation should be considered as a subsequent step following visibility and process improvement. It's important to prioritize visibility by checking the “pipes” and assessing value add versus waste. Once the root cause has been identified and addressed, automation can be pursued (as an example)When it comes to cost savings initiatives, they often focus on EBIT savings and primarily target the supply function. This is because it's considered the "easiest" single node EBIT relevant function, and it doesn't require significant organizational changes. To put it another way, it makes sense to prioritize negotiations with the supply base and working capital improvements in the short term before diving into S&OP (Sales and Operations Planning).
However, it's important to note that cost cutting without a clear strategy and performance management in place can be risky and shouldn't be seen as a shortcut.
For example, reducing transportation costs without considering the impact on service levels or quality can be detrimental. Instead, linking transport costs with the overall supply chain strategy can lead to supply chain differentiation. This involves segmenting customer expectations based on factors such as lead time, service level, cost to serve, assets, and flexibility, allowing for cost reduction in areas where customer expectations are not compromised or where customers are willing to pay a premium.
A turnaround team would do exactly a mix: short term momentum savings, clear portfolio strategy, supply chain services and capabilities for a sustainable / profitable business setup.
Please let me know if you need further help.
PhD Candidate and Lecturer in Healthcare and Biotecha year ago
I think this question needs to be extended as answer depends on:1. Are you ready to make upfront investments to make proper turnaround
2. What are the levels of urgency and appetite to make dramatic changes - do you have a time?
and
3. Availability of resources and supporting infrastructure to deliver on cost cutting measures
As example, if urgency is focused on "now", you certainly do not have time to strategize on this and focus is on quick wins. So for these more effective cost reduction levers should be identified etc.