Look across the supply chain

Brooks Kitchel and Jack Horst, partners in the management consulting firm Kurt Salmon Associates, offered the following tips for reducing costs in supply chain areas:

Merchandising and planning. 

• Use advanced assortment-optimization techniques to right-size your assortment breadth and to get rid of unproductive inventory.
• Introduce hold and flow inventory modeling to reduce inventory needs while maintaining service levels.
• Right-size your buying/planning organization to increase efficiency and reduce costs.

Transportation. 

• If you haven’t evaluated all parcel, LTL and TL transportation rates in the past six months, you’re probably paying 10% or more than you should be for transportation. You can use several tactical approaches for quickly reviewing rates and driving carriers to the negotiation table.

Distribution Centers. 

• Slash unproductive time in DCs. Many companies have standards for performance of tasks in DCs that raise the level of productivity for the time associates spend actually doing the engineered tasks. Unfortunately, 25% to 50% of paid time in many DCs often is not associated with execution of value-added tasks.

Unproductive time can be easily identified, categorized and managed through affordable, easy-to-install labor-management solutions. Reductions in this unproductive time can improve overall DC costs by 5% to 10% over a short time frame.