Every business’s number one priority is reducing logistics cost. There are various methods that can help improve supply chain processes and in turn safeguard businesses cost control. Methods of cutting logistic costs can range from optimizing inventory levels, recharting better shipping networks, creating better processes, improving supplier/third party relationships and so on.
Organizations have to adopt and apply lean principles to their company’s business and workflow processes.
Value: Obtain feedback from clients. Try to tap into your client’s company’s’ knowledge base. Based on past business demands and supply needs define what is of most value to their customers.
Transport – Needless movement of materials from one location to another.
Inventory – over producing goods requiring huge costs in storage, consumption of space, packaging costs etc.
Motion – Redesign the warehouse floor plans and have everything thing at the disposal of workers in one location so as to avoid unnecessary movements of workers.
Waiting – Cut down on waiting periods. Usually occurs due to un-synchronized interdependent processes, poor technical support etc. This leads to loss of time and missed opportunities.
Over-Processing – Due to lack of standard operating procedures, sometimes employees perform tasks as they see fit or use wrong equipment’s for a task.
Overproduction – Too much inventory causing inventory costs due to lack of demand & supply data.
Defects – Due to poor quality control and quality assurance measures results in defective products, returns, law suites.
Flow: Create constant flow and strive to a attain balance between their supply and demand requirements.
Pull: A company should produce based on demand. This in most cases requires having a supply chain management system that’s well integrated with their back-end warehouse, suppliers/vendors and their front eCommerce for their clients. With all those integration points in place when a customer places an order the entire works are just in time.