Did you know, one of the world’s leading designer, manufacturer and distributor of agriculture solutions was able to reduce inbound logistics cost by 28% by implementing supply chain cost reduction techniques? n this article, we will discuss about how to Optimise Cost through Supply Chain Management.
The organization was sustainably growing for the last few years, the company was able to achieve a significant part of the growth through acquisitions. Usually, when organizations grow through this medium, they always face complexity. In the case of this organization, they started to face supply chain complexity along with the increased cost. Over the years, they tried a few ways to address these issues, but everything was in vain.
In the year 2012, the management decided to shift from short-term methods to long term strategies to resolve the issues. That is when they decided to implement supply chain cost reduction techniques.
Cost Optimisation through Supply Chain Management
The organization acquired various brands under its umbrella. Hence, the product portfolio of the organization was pretty much vast now. Initially, optimization planning, sourcing and inbound logistics were managed by the internal team for a lot of countries with the use of various supply chain management tools and systems.
Because of the decentralized environment, inbound logistics and transport management were separate fields. There was inadequate transparency in the supply chain. The entire organization did not take advantage of synergies and economies of scale. These issues happened due to the backdrop of an unpredictable and seasonal market.
The organization than planned to implement a supply chain benchmarking exercise to reduce cost. Within a year of implementing these techniques and strategies, the organization received freight cost reduction of around 18%, reduced inbound logistics costs by 28%, increased network performance by 25% and reduced the inventory almost by the quarter.
Hence, as you can see, supply chain management has been helping various industries and sectors to optimize their costs and improve their profits. So, have you implemented supply chain management in your organization yet?