Supply chain costs can quickly get out of hand if you fail to pay close attention to delivery costs, among other factors.

By Henry Brown

You don’t have to be a multinational corporate company to benefit from keeping a tighter reign on supply chain costs. For businesses of any size, it’s one of the most important things you can do to increase your profit margins and improve your bottom line. But how can smaller businesses start improving the way they track inventory, deliveries, and shipping? Let’s take a closer look at some of your options.

Focus on the customer

First of all, make sure you are putting your customer’s needs at the heart of your supply chain strategy. Give them what they need, and trim off the fat from everything else. For example, do your customers really demand next day delivery? If not, you can save a fortune on express postage. Another example: do your customers benefit from all that fancy packaging you use? If they are happy with a standard brown bag or box, give it to them. It will save you money, and enable you to offer them much better value.

Objectives first

When you know what your customer wants, you can create a supply chain strategy that fits their needs. It is vital that you do this if you want to create a flexible, fluid supply chain that can change as and when the situation demands. Define your objectives, and ensure that your tactics fit into those targets. Once you have done that, you can set up key performance indicators to enable you to judge your success and weaknesses. Doing so will help you stop spending money on irrelevant and wasteful practices that have an adverse impact on your bottom line.

Control your inventory

Tighter controls on your stock levels and inventory can help you eliminate waste and keep it at optimum levels. Take a look at theories such as Just in Time to see how much you can benefit and pare back your costs. In short, the more stock you hold, the higher your costs. But running out of inventory can lead to disappointed customers and failure to meet demand. There is a delicate balance to strike, and the right inventory control system for your business is the best way of finding that balance.

Perfect your transportation logistics

As a small business, you won’t have the luxury of owning a fleet of delivery vehicles. It is essential, then, that you find the right transportation logistics solution. Look for a customizable transport service that you can tailor to your needs to avoid overpaying. Ensure you are maximizing your returns by filling every shipment to capacity. And always keep tabs on the potential of using new routes to cut back on the costs of fuel expenditure.

Benchmark your suppliers

Don’t rely on your suppliers to give you the perfect service – you have to be the judge of that! Set up benchmarking scores to ensure they are delivering the goods at all times. If standards are slipping, or you find an alternative, don’t be afraid to make a switch. Benchmarking can help you identify a lot of weaknesses in your supply chain. But, most importantly, it gives you power and evidence when confronting poor supplier performance.

Hope this has helped – and feel free to share your supply chain tips in the comments section below.

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Henry Brown is an online marketing executive. When he isn’t talking shop he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.