10 Tips for Cost Savings On Your Supply Chain
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Supply chain accounts for a significant amount of costs within any business so it is important to save money wherever you can. Our top 10 tips to cost savings on your supply chain are listed below, so check out just what you can do to save some money when securing supplies.
1. Always ensure that you implement supply chain performance ( such as Supplier performance) management techniques. This may seem as if it will take up some time, which it will initially, but in time you will be repaid for the input you devote. Measuring performance will show you what areas require improvement enabling your business to run more cost effectively.
2. Concentrate on quality at the right price. When you are looking for supplies it can be tempting to look at the price first. But instead you should be looking for quality items that are offered at the right price. If you concentrate on securing cheap goods only, you are likely to receive more defective or shoddy goods.
3. Focus heavily on planning and supply chain forecasting – getting this right will ensure your not driving unnecessary inventory or cost into your organization and that you are tuning your supply chain effectively and mitigating problems like the
4. Have an appropriate organizational structure. This means setting up an efficient purchasing or procurement team. This will help stamp out any unnecessary spending and this will translate into spending. It can take time to change the culture and mindset when it comes to supplies, but a strategic approach will ultimately save you money.
5. Eliminate waste within the supply chain. This can ensure that the supply chain becomes more focused on Just In Time supplies or having the optimum level of supplies only. So analyze the supply chain and try to ensure that you reduce waste in whatever form.
6. It is also important to set up some Key Performance Indicators and some Key Risk Indicators to help you to manage the supply chain. These need to be used throughout the organisation so that the supply chain is managed by all sections of the company.
7. Run a spend analysis. This sounds obvious, but many companies are blissfully unaware of exactly what they are spending. The analysis can be done using software, but until you establish exactly what you are buying, it will be impossible to save money.
8. Select your global supply chain with care, watch for hidden costs.
9. Benchmark your suppliers. Do not assume that simply because you have used a supplier for a long time, that they are providing you with the goods you want at the cost you want to pay. Benchmarking suppliers can show up any weaknesses within the supply chain and then allow you the opportunity to secure new suppliers if and when required.
10. If the benchmarking process does show up weaknesses within the supply chain then you need to ditch those suppliers and secure new ones who will offer you a better service. Changing suppliers is never a desirable thing to do, but if it will save you money and enhance the performance of the supply chain, then it is worth the time and effort. Complacency can set in and if you fail to challenge this, then you will continue to spend money unwisely!
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[…] viability of their business. Global supply chains are often one of the first methods used for Supply chain cost reduction activities 3. The global supply chain means that businesses within countries which traditionally did not […]