Enhancing efficiency through supply chain refurbishment

Domestically, labour shortages, increasing margin pressures on third-party logistics, capacity, freight and fuel costs, and increasing rental costs add to the strain. 

Doing more with less has become crucial for businesses to stay competitive. To achieve this, companies should apply longer-term strategies to improve upstream logistics, distribution centre (DC) networks, and streamline delivery performance. While investing in emerging technologies and longer-term solutions is key, refurbishing existing supply chains can be a powerful yet overlooked approach as businesses prioritise their efforts around new strategies and managing daily operations.

Optimising current resources can lead to immediate cost savings and service improvements, providing a solid foundation for more significant, long-term initiatives and, often, funding for long-term initiatives. 

This approach not only addresses immediate challenges but also builds a resilient foundation for sustained growth and efficiency. 

Based on our recent experience advising clients, the following areas of focus have enabled organisations to better achieve significant cost savings by focusing on doing more with less:

1. Simplifying ranging and inventory management

Consolidating DC footprints can significantly lower third-party logistics fixed cost per unit commitments. Simplifying and optimising product flow rules not only reduces the cost per unit, but can provide higher productivity, availability and inventory control.

An integrated approach to merchandise management and inventory deployment can reduce complexity, minimise inventory holding periods, and improve both DC fixed cost fractionalisation and freight utilisation. We recently carried out an end-to-end review of product flows for a client, which tripled achievable Supply Chain cost savings.

2. Adjusting logistics for productivity and cost efficiency

Transitioning activities to higher productivity, lower cost per unit locations – especially during non-peak periods – can help achieve significant savings. This approach employs flexible resource use and reduces operational expense. 

In addition, fine-tuning inventory and ordering profiles can significantly lower downstream cost drivers while minimising disruptions to existing systems and processes.

For example, we recently helped a clients reduce outbound freight costs by more than 30% by optimising pallet configurations, adjusting order frequencies, and revising minimum order quantities. These targeted adjustments streamlined their logistics operations and achieved significant cost reductions, whilst improving customer delivery performance.

3. Contract reviews and negotiations

Contracts for third-party logistics and goods not-for-resale contracts can often be rolled over during busy times or due to lack of awareness of alternatives. Ensuring that contracts remain current is key to maintain cost efficiency. Engaging in data-driven negotiations rather than full procurement requests can help uncover opportunities to incrementally add service capability instead of switching service providers; often possible with minimal disruption to operations. We recently worked with a client to review last mile delivery contracts, identifying a 20% cost reduction in like-for-like services.

These strategic adjustments can quickly enhance service levels and reduce costs through rapid access to new third-party logistics capabilities – which can be expanded or contracted as required. 

4. Implementing practical, incremental initiatives

Focusing on small, actionable steps with strong program governance, that don’t rely on complex systems is a practical approach to achieving quick wins. These short-term workarounds can provide immediate benefits while longer-term solutions are being developed, provided they are carefully managed to avoid becoming entrenched in daily operations, or impact longer-term initiatives. 

By maximising the use of current capabilities and considering the potential of doing more with less, you can achieve immediate improvements and set the stage for future success. For businesses seeking to optimise their supply chains, embracing refurbishment and aligning the end-to-end value chain can unlock significant cost savings and enhance operational efficiency.

Reach out to our experts to explore how we can help you do more with less and navigate the complexities of the modern supply chain landscape.