There are two types of businesses — those that sell products and those that sell services. If your business sells products, you need to have a supply chain organization in place to make sure your customers get what they order in a timely manner. However, there are lots of variables and you’re going to have to tweak your management until your business is efficient. So, here are four ways to increase you company’s bottom line through supply chain management.
Supply Chain Segmentation: Adjusting to Different Customer Demands
There is no one-size-fits all for customers, so it doesn’t make sense to serve them all the same way. For instance, individual customers need a different level of communication and customization than large companies and organizations with specific timetables. Distributors and retailers also need different supply chain policies to meet their needs. Creating different policies for each type of customer is known as supply chain segmentation. This helps businesses be more efficient and adjust to variables better.
One example where supply chain segmentation has helped a company’s bottom line is Dell’s direct-to-consumer business model. They implemented a segmented policy for serving their customers, retailers, and distributors that had different policies for each group that targeted cost savings in each area. Dell saved $1.5 billion in operation costs after segmentation. They are also on Gartner’s Top 25 Supply Chain Organization’s List in the number two spot now.
Logistical Trade-Offs: Balancing Transportation, Material Handling, and Receiving Costs
There are trade-offers in every part of business, and the supply chain organization is no different. For example, standard size boxes reduce box costs, but then you have to spend more money on bubble wrap and strategic packaging training. Additionally, when transporting with secure electronics, glasses, foods… it makes more sense to send trucks out that are completely full of products in order to reduce transportation costs, but this increases inventory holding costs. So, your business has to look at all the cost trade-offs carefully to make smart financial logistics decisions.
Strategic Partnerships: Give a Little, Take a Little
Whether your business manufactures its own products or not, you still have to get your supplies from somewhere. This is where strategic partnerships can help you save money. For instance, you can find a shipping company that will give you a discount if you make a partnership only to use them. There are all sorts of strategic partnerships you can find to save money, and they don’t just have to be shipping scenarios.
Product Life-Cycle Management: Cut Costs Along the Way
Another place some businesses lose money is when they don’t manage their product life cycle. Basically, product life-cycle management is following a product from conception to manufacturing and distributing. There are several steps in the process that can save businesses money if they take the time to find them. That’s’ where supply chain management software comes in handy. Next-generation supply chain management (SCM 2.0) solutions are changing the game because they help businesses manage everything in their supply chain organization, including the product life cycle.
As you can see, businesses can save money by implementing changes to their supply chain management and organization. There are always trade-offs to changes, so businesses need to choose moves to make them more efficient and give them better customer service.