Dupré Logistics


How to Find and Eliminate Hidden Costs in Your Supply Chain

Wednesday, July 16, 2014

For your company, the devil is in the hidden costs.

A comprehensive logistics cost analysis is critical to finding those expenses that are not in line with the rest of your supply chain and expectations. This exercise is a crucial first step to implementing a cost management strategy for your supply chain.

Let’s take a look at some of the causes of these hidden costs:

Carrier error

This particular problem is both prevalent and preventable. The majority of blunders aren’t discovered for months because of the human factor: people fail to detect them. Preventing carrier mistakes is a complex task and is best left to a consultant that understands their practices and can perform an in-depth review of invoices.

Shipping exceptions

These tend to occur because of a lack of visibility in your supply chain process. Often, the most practical way to address this problem is to implement solutions that give your shipping managers the technology and tools they need to respond to shipping exceptions quickly.

One-sided partnerships with supply chain partners

Unless your entire logistics process is in house, you’re entering into contractual terms with your carriers and other partners in your supply chain. Often, these terms are one-sided, and companies feel they cannot leverage better conditions. Businesses should constantly be revisiting the agreements they maintain with their logistics partners to ensure terms are being met by both parties are kept up-to-date.

These hidden costs can drain precious resources, so it’s crucial that you make adjustments to your supply chain management as soon as you identify them.

So how do you go about eliminating these hidden costs? Here are a few strategies:

Toss your old and unreliable spreadsheets.

You can purchase affordable supply chain solutions that respond quickly to changing needs and give you a real-time, accurate overview of your logistics. The costs involved with out-of date solutions for managing your supply chain are tremendous, even when compared to the upfront expense of implementing the latest technology. The excuse that “this is the way we’ve always done it” won’t cut it when you’re fighting against powerful competitors with technology on their side.

Utilize metrics.

Analyze your numbers enterprise-wide with management dashboards that offer up-to-the-minute details that you need to react to shipping exceptions and unavoidable disruptions in your logistics approach. The key data indicators include order fulfillment, return on working capital investment and cash cycle efficiency.

Collect information that serves a purpose rather than just gathering useless data.

Supply chain excellence means giving your managers and other key personnel easy access to the details that are relevant to your business and align with logistical goals. Assembling metrics that you never need to review is pointless.

Take advantage of your team of employees.

Involve your team members in logistics management decisions when possible and listen to their concerns. Leaving your personnel in the dark eventually impacts how they deal with customers, leaving them unwilling or unable to respond to customer needs.

The key to eliminating hidden costs and strengthening your supply chain is identifying the inefficiencies and bottlenecks that weaken it, and making changes to logistics operations where necessary. With the right assistance from a logistics professional, you can discover and eliminate hidden costs that threaten your bottom line.

© Dupré Logistics  Privacy Policy