How to reduce costs while improving efficiency in your supply chain

21 August, 2017
How to reduce costs while improving efficiency in your supply chain

What is every manufacturers dream scenario when thinking about their supply chain? For the most part, it always includes cutting costs and improving efficiency or productivity, so we’re going to tell you how to do exactly that.

We asked manufacturers and the manufacturing community from all around the world, ‘what advice would you give to your peers in order to reduce costs and improve efficiency within the supply chain’, and here’s what 10 people had to say…

1. Stuart Mackay, UK

Make sure your ERP system is set up properly so that you only order what you need when you need it. Also watch out for extra charges on deliveries that you might not be capturing.

2. Ashley Doust, UK

MRP - provided your data has accurate lead times and process times for manufacturing, MRP can reduce the amount of inventory most companies tend to hold. Make use of resource planning, minimum order quantities, forecasts and coverage groups.

All of these can make you become more ‘lean’ and create a more JIT approach. Use trade agreements to empower your purchasing negotiations and discounts. Use the ERP system to create safety stock journals for you.

This looks at the movements of materials against their lead times and depending on the service level and number of ‘stock outs’ you want to have, your solution can determine the safety stock for you.

3. Christopher Johnston, US

Establish a robust sales & operations planning process, measure inventory accuracy (number of cycle counts that match ERP system balance - do not measure accuracy based on inventory value), measure supplier on-time delivery, measure on-time shipment of sales orders, measure inventory turns, eliminate obsolete and slow-moving products & inventory.

4. Emad Akhtar, UAE

Reduce cost by optimizing your inventory level and reduce carrying cost. Adopt a good resource planning tool to manage your resources including labor, distribution capacity and inventory more efficiently.

5. Kurt Hatlevik, Norway

Bar code data-collection systems provide enormous benefits for just about any business. With a bar code data-collection solution, capturing data is faster and more accurate, costs are lower, mistakes are minimized, and managing inventory is much easier.

A bar code scanner typically can record data five to seven times as fast as a skilled typist. Keyboard data entry creates an average of one error in 300 keystrokes. Bar code data entry has an error rate of about 1 in 3 million. This benefit goes hand in hand with better decision making. With better information, you can gain opportunities and get the jump on competition.

6. Niraj Nanda, India

- Proper segmentation of products, vendors and customers to guide alignment of corporate objectives with manufacturing and distribution strategy.

- The above amounts to capturing the required details about item, vendor and customers accurately in the data base of ERP.

- Strategic network optimization, including the number, location, and size of warehousing, and facilities. This amounts to accurate design of warehouse management system wherever necessary.

7. Luciano Cunha, US

In order to make the process more efficient it is absolutely key that manufacturers are able to have mobile devices that a worker can leverage to both receive materials, pick to production and then pick to ship out of the company. Streamlining the movement of materials throughout the facilities is critical to minimizing waste.

8. Steve Weaver, UK

The whole supply chain and costs need to be analysed, storage costs, movement cost (including the rising fuel costs), custom duties, all indirect and direct variable and fixed costs, and the starting base cost. Understanding the total delivered cost of the product will enable a business to be in a better position to make decisions on cost realignment.

Companies may focus on the customer end of the supply chain but this is neglecting the purchasing side where cost savings and efficiencies are sometimes easier to make and can have a bigger impact on the overall profit.

Holding high levels of inventory isn’t the answer for supplying the customer element of the supply chain, this simply increases costs. Making the supply chain agile to deliver products quickly and cost-effectively is the key. The supply chain touch points need to be assessed to ensure the business is demonstrating it can react to change whilst delivering high quality product in an unpredictable market.

9. Antony Prabhath, UAE

Apply the Kanban process and focus more on the concept. Have the accurate lead-time set for the materials that are imported. This is to avoid the carrying cost and shortage.

10. Jorgen Gjerde, Norway

More efficient picking routes, improving scanning devices to be more reliable and more intuitive views in the ERP-systems to monitor the whole process.

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