• Iain Prince, Author |
2 min read

Supply chains are starting to run smoothly again as the impact of the pandemic falls away. But the world is not as it was. The cost of materials, energy, labour, warehousing and transport has rocketed. Businesses across sectors are feeling the pressure on profitability and value as a result.

On the positive side, the current relative stability creates a moment of opportunity – a chance to explore the best opportunities to optimise costs now and ease the pressure. In our experience, tactical cost-optimisation has the potential to deliver a reduction of up to 2 per cent of operational costs within weeks. 

Where to look for longer-term operational savings

Once tactical options have been exhausted, a longer-term campaign to transform the supply chain will deliver further and more substantial operational savings. There are strategic opportunities across all capabilities:

Sourcing and buying: Explore new sourcing models and source-to-contract options and look at improving strategic category management and supplier lifecycle management.

Direct procurement: Consider the strategic opportunities from Cognitive Contract Management (CCM) and digital procurement.

Indirect procurement: Find out about our Powered Procurement solution which leverages leading third-party technology solutions to drive agility and save costs.

Manufacturing: Undertake footprint analysis and test ‘make vs buy’ decisions to identify cost-optimisation opportunities within your manufacturing capability.

Logistics: Investigate the possibilities from a transport optimisation system. For inbound logistics, look at how choosing air and sea freight could help reduce costs.

Warehouse: Understand how a warehouse management system can transform this capability and deliver important savings.

Customer: Introduce or tighten customer segmentation to reach better decisions on how much to spend servicing high- and lower-value groups.  

Returns: Don’t neglect the opportunities from optimising your reverse logistics operation.

Looking to the future

Cost pressures present the most immediate challenge for many businesses, and this is where well targeted tactical measures can provide rapid relief. These can also be the perfect launchpad for a longer-term campaign to build an agile, resilient and cost-efficient supply chain that’s fit for the future.

To discover other opportunities for reducing costs, explore our new guide, ‘Cost optimisation opportunities for the year ahead.’