Saving in Your Supply Chain: How to Identify and Minimize Hidden Costs

logistics and transportation concept

Is your supply chain sucking you dry? Moving your goods from point A to B and C isn’t always easy, especially when there are dozens of variables at play. Every dollar counts when it comes to mastering the supply chain. Your business may be hemorrhaging money in certain areas that you may not even realize. For example, your order fulfillment may take far too much time and use way more resources than necessary. With a few adjustments, you can improve your operations and reduce hidden costs.

However, identifying potential hidden costs can throw some business owners for a loop. To get started, collect as much data on your operations as possible. Once you identify bottlenecks, you can create an effective solution.

Monitoring Your Inventory and Supply Chain Operations

You can’t improve your supply chain if you don’t know how it works. If you only have a basic idea of how your products move from place to place, it’s best to have every step down to an exact, quantifiable science. You should know exactly how long it takes your employees to grab items from the shelf, prepare your packages for delivery, and, finally, ship the orders. You should also know how often your packages arrive on time versus how often they are delayed. If your orders are delayed, it’s important to note where the delay occurred.

Once you start collecting data on your operations, you can compare your findings with the rest of the industry. If your team is spending too much time (and money) preparing packages and shipments, it’s time to make a change. As you adjust your operations, you can compare the results with previous statistics to measure your changes.

Inventory management software will help you track your inventory as it moves through the supply chain. According to Forbes, transportation management systems can improve freight savings by up to 8%. Clearly, every bit of information can help you reduce costs.

large inventory in warehouse

Tips for Minimizing Hidden Costs

Once you have this data on hand, it’s time to start making some changes. Use these tips to improve efficiency throughout your facility.

  • Reorganize the Layout of Your Facility

If item retrieval times are longer than you might’ve hoped, you can reduce confusion by reorganizing your facility with stack racks. Arrange your products on the shelf so that the most popular products are closest to the loading dock and the heaviest items remain on the bottom shelf. Keep product tags visible to reduce confusion and avoid putting similar items in the same container. You can use nesting totes and boxes to organize dissimilar items.

Effective inventory management requires taking stock of demand and optimally rearranging your products. Some of your products may fade in popularity, so continue changing the layout as trends come and go.

  • Reuse Containers

Utilizing recycled and used storage containers will help you save money in more ways than one. You won’t have to spend as much money on storage and shipping supplies. With reusable containers, you also won’t have to order new packaging supplies every time you get hit with another order. Your employees can focus on fulfilling orders instead of building up boxes and breaking them down. Remember to wash off these containers before inserting them back into the supply chain. They should be completely clean and free of debris before coming into contact with your goods.

business logistics concept

  • Increase Communication with Suppliers

Improving the supply chain isn’t just about individual nodes and facilities. Real change is accomplished at the macro level. Talk to your suppliers and business partners to find solutions to these problems. If some of your carriers are having trouble reaching their destination, consider relocating your facility or partnering with different businesses so drivers don’t have to travel as far. You can also use distribution centers to better move your products around the supply chain without having to invest in more warehouse space. You may also decide to change travel times and routes to improve efficiency.

If you use GPS trackers and inventory management software to monitor your inventory in transit, you can address issues or delays in real time.

The supply chain is ripe with hidden costs, but you can improve your operations by monitoring every aspect of your facility. Use these tips to get your products out the door for less.