Cost Control & Reduction in Supply Chain
Rising energy/fuel and freight costs, a greater number of global suppliers, new technology, increasing labor rates, new labor and conservation regulations, and rising commodity prices mean that operating costs are under more extreme pressure than at any time in the past. Keeping these costs down is the key to better profitability and can be the only competitive advantage a business has.
Transportation/Logistics
The rising cost of transportation is a problem for some companies. Supply chain globalization means that reducing transportation costs will be a major objective for many companies. One way to do this is – better demand and trend forecasting. When forecasting is done accurately, it allows for more efficient logistical planning and reduced handling with fewer trips to satellite depots or customers without impacting the service levels. It allows for improved raw material and labor planning.
The solution can also be found in visibility. In this case, it's the visibility of the supply chain. Investment into platforms like TMS (Transportation Management System) and YMS (Yard Management Systems) allows for the visibility that is needed to see the parts of their supply chain that are notorious for hiding waste or where there are inefficiencies. (Efforts and targets needs to be put in place to calculate track and reduce waste in every area with a goal of always being better that the last result).
Asset and labor utilization
Not fully utilizing your assets or labor effectively can account for great wastage. For example- when labor is not scheduled efficiently to cover for high traffic times of the day, you lose money from employees waiting idle or customers getting frustrated from waiting in ques and not returning due to poor service.
Having machines operating at less than optimal capacity at any time accounts for wastage which also increases costs. Calculating your machine utilization against the manufactures promise and removing the standard 5%-10% for maintenance allowance will be a great start to see what level of out put to expect from each of your machines.
Finding ways to have multiple uses for your machines or taking on other business as a 3rd party producer/service provider in the quieter times of the month to increase utilization is a great way to reduce costs while also increasing income.
Basically, get more productivity out of fewer assets.
Where possible try to automate. This reduces cost while increasing productivity and makes is your services/product cheaper. Rationalizations should be done constantly to ensure that resources are not wasted on non-productive services/products.
Save on energy costs by using more renewable sources as much as possible. Installing energy saving and motion detector lights systems.
Finding ways to make money from your waste/byproducts. The profits may be small, but it is still more than nothing.
The best key to reducing costs in any business no matter what your challenges are, is PERFORMANCE MEASUREMENT. Measure any key area of your business and try to continuously improve on it. You do this consistently and the results will be great. “measure what you value and it will improve”
Rising energy/fuel and freight costs, a greater number of global suppliers, new technology, increasing labor rates, new labor and conservation regulations, and rising commodity prices mean that operating costs are under more extreme pressure than at any time in the past. Keeping these costs down is the key to better profitability and can be the only competitive advantage a business has.
Transportation/Logistics
The rising cost of transportation is a problem for some companies. Supply chain globalization means that reducing transportation costs will be a major objective for many companies. One way to do this is – better demand and trend forecasting. When forecasting is done accurately, it allows for more efficient logistical planning and reduced handling with fewer trips to satellite depots or customers without impacting the service levels. It allows for improved raw material and labor planning.
The solution can also be found in visibility. In this case, it's the visibility of the supply chain. Investment into platforms like TMS (Transportation Management System) and YMS (Yard Management Systems) allows for the visibility that is needed to see the parts of their supply chain that are notorious for hiding waste or where there are inefficiencies. (Efforts and targets needs to be put in place to calculate track and reduce waste in every area with a goal of always being better that the last result).
Asset and labor utilization
Not fully utilizing your assets or labor effectively can account for great wastage. For example- when labor is not scheduled efficiently to cover for high traffic times of the day, you lose money from employees waiting idle or customers getting frustrated from waiting in ques and not returning due to poor service.
Having machines operating at less than optimal capacity at any time accounts for wastage which also increases costs. Calculating your machine utilization against the manufactures promise and removing the standard 5%-10% for maintenance allowance will be a great start to see what level of out put to expect from each of your machines.
Finding ways to have multiple uses for your machines or taking on other business as a 3rd party producer/service provider in the quieter times of the month to increase utilization is a great way to reduce costs while also increasing income.
Basically, get more productivity out of fewer assets.
Where possible try to automate. This reduces cost while increasing productivity and makes is your services/product cheaper. Rationalizations should be done constantly to ensure that resources are not wasted on non-productive services/products.
Save on energy costs by using more renewable sources as much as possible. Installing energy saving and motion detector lights systems.
Finding ways to make money from your waste/byproducts. The profits may be small, but it is still more than nothing.
The best key to reducing costs in any business no matter what your challenges are, is PERFORMANCE MEASUREMENT. Measure any key area of your business and try to continuously improve on it. You do this consistently and the results will be great. “measure what you value and it will improve”
