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Where to Spend & Where to Save in Your Supply Chain

Tips for Reading Your Cash Flow Statement

Your supply chain refers to the process your product goes through to get from initial manufacture to the end user. Many companies use a third party logistics provider (3PL), which is a company outside of yours that transports, houses, and distributes your product. 

Where to SAVE on Your Supply Chain

Get competitive shipping rates

If you have a product that ships to stores or customers, you are likely quite familiar with UPS and FedEx and their respective rate structures. Shipping costs are unavoidable, but do what you can to lessen the burden. Negotiate for better rates by price shopping. Ask for discounts. Then ask again, and don’t forget – if you’re a member – shipping discounts are often just a call away.

Always plan ahead

Planning ahead will save you money (pretty much always).  2-day shipping is insanely expensive. Air freighting product from China instead of sending by boat is insanely expensive. Overnighting a shipment should be a crime. If you can manage to give yourself enough time between deadlines, you can steer clear of this price gouging that will easily eat into your bottom line.

Make the most of available space

Sometimes processes can fall into place without much thought. One day an employee does something a certain way and then it becomes the rule. It’s important to take a step back and evaluate the way you use your space. Often times you can save money by rearranging things to maximize space.

Become experts at packing

If your warehouse ships out product and it comes back damaged, this is expensive. Spend a few hours or days training in best practices for shipping. A little time upfront will save in the long run.


Where to SPEND on Your Supply Chain

Get to know your logistics provider

In a different era, your sales rep would have taken you out to long boozy lunches of shrimp cocktail and steak. But this is the era of moderation. Airlines hardly even supply a complimentary non-alcoholic beverage anymore. Your vendors will not spend as much as they used to in pursuit of your business.

But it is still worthwhile to develop a relationship. If you use a 3PL, you need to make them your new best friend. If they don’t offer to take you out to lunch, invite them instead. Talk shop but engage on a personal level as well. When the time comes to negotiate terms or discuss business goals, it is important for these conversations to be face to face. Travel to them if you have to. Visit their offices. Spend the money to connect.

Spend the extra money to streamline the process

It may be tempting to have your truckload of product delivered to your home-office and unloaded by your employees to save on payroll. Avoid this if you can.

I’ve seen a company stop daily operations to form a 20 person human chain to carry a truckload of product up to the fourth floor of an old warehouse building with a broken freight elevator. It was the only option at the time and while it did build team camaraderie, it was hard work.

It can be worth it to spend the money for your 3PL to do this. Consider the costs of your employees time vs. the cost for labor and warehouse storage at the 3PL. And it will be more efficient to have the 3PL ship product out to stores or customers.

Automated systems are almost always better

This is one of those “you gotta spend money to make money” situations. I once saw a warehouse where the entire 16,000 sqft operation was run off of one excel spreadsheet. It was a beautiful spreadsheet filled with formulas, but it was finicky. Only one person could fix it, and if he wasn’t there – finding a case pack of product X was nearly impossible.

Warehouse management systems (or WMS) have some upfront costs. There are options available for any size business. But they all serve the purpose of allowing product to flow in an organized and efficient way. Consider investing in a system to streamline your process.

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