Distributors Pressured to Reduce Costs
In recent years, distributors have felt the increasing pressure to reduce costs. According to DCVelocity, supply chain managers can successfully reduce costs if they know where to look. When it comes to the supply chain, areas to investigate include the following:
• Inventory - Managers would be smart to examine their business and really understand their customers product demands.
• Transportation - Reevaluate your use of carriers, modes of transportation and look at overnight parcel shipping costs. Also look at inbound transportation expenses — an area that is often overlooked.
• Facility layout/design - The business is constantly changing and often times, your facility layout should change with it.
• Material handling systems - Removing bottlenecks, finding shortcuts, and elevating both performance and reliability can have profound impacts on both service levels and operating costs.
• Labor - Managements approach should include the application of process redesign, performance standards development, clear work/task assignment, flexible workforce planning and scheduling, hands-on floor supervision, and visible performance reporting—ideally in an environment of high-performance continuous improvement.
• Facility network rationalization - Understanding that the network needs to include facilities with different missions is a key to the construction of a balanced network.
• Sourcing and procurement - Set up process improvement and cost reduction teams tin partnership with key suppliers. Everything in the relationship is fair game—packaging, ingredients, processes, physical handling, and product development—anything that can raise your quality, improve your manufacturing reliability, and enhance your relationship with your customers.
• Employee retention - High turnover rates will raise hiring and training costs. Invest your time in finding the right employees right off the bat, and then create a culture where workers are recognized and rewarded for hard work.
To read additional suggestions on how to keep costs competitive, click here.
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