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Simple Strategies for Reducing Supply Chain Costs

A recent study shows the average manufacturer spends nearly 6% more as a percentage of sales than the Best in Class manufacturer in the same industry. What are you doing to be Best in Class?

In a 2015 study by News for Electronic Purchasing and the Supply Chain, respondents said the following measures have been the most effective for cutting supply chain costs:

1. Improving internal efficiencies – 76%
2. Improved forecasting – 48%
3. Cheaper or better sourcing of materials/new suppliers – 48%
4. Re-negotiating existing transport contracts – 44%
5. Investing in technologies that cut costs – 40%
6. Infrastructure investments – 32%
7. Near-sourcing to reduce transport costs- 28%
8. Switching to new transport/logistics providers – 26%
9. More outsourced manufacturing – 18%
10. More outsourced logistics or transportation – 16%

Are you challenging your supply chain costs? If not, be sure to start by understanding your costs and then develop a system to measure those costs using key performance indicators (KPIs). Involve personnel from each department including, operations, purchasing, and accounting to develop the KPIs and in setting goals to improve the supply chain and reduce cost.

We have significant experience in assisting our clients with supply change management and would love to help assist with identifying KPI’s and developing strategies to measure and reduce your supply chain costs. Contact Kurt Beier at kbeier@blueandco.com or 317-428-6813.

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