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How To Reduce Supply Chain Costs in 2019

Posted by Jason Minghini

With all industries focused on the bottom line, cost saving is a hot topic for most organizations. In the past five years, businesses have increasingly looked at their supply chain to reduce costs. Large players like Amazon are also putting pressure on the rest of the market to lower costs while still delivering higher, quicker service levels. There are many areas where costs can be reduced in the supply chain process – some less obvious than others.

Kenco_ReduceSupplyChainCosts_r1_1-Real Estate HeaderKenco_ReduceSupplyChainCosts_r1_1 - Real Estate GraphicReal estate is a hefty investment but can also save money if properly managed and handled. One way that real estate can reduce costs is by having more multi-client facilities. In the past, many have stayed away from multi-client facilities to avoid commingling with competitors. However, sharing space with other businesses means that costs are spread out among all customers in the facility, which can result in significant savings.



Kenco_ReduceSupplyChainCosts_r1_2 - Labor

Kenco_ReduceSupplyChainCosts_r1_2 - Labor Graphic-1Cutting labor costs doesn’t necessarily mean physically decreasing the number of workers on staff. Through smart management, labor costs can be reduced greatly without sacrificing any workers. Better management of a workforce can lead to less turnover and a more diligent team that in turn can decrease missed shipping deadlines and other occurrences that affect costs.



Kenco_ReduceSupplyChainCosts_r1_3 - Improve Visibility

The supply chain is no longer linear – it’s comprised of multiple touchpoints that increase the need for unshakable visibility. Strong forecasting software, along with a thorough understanding of your business to foresee seasonal peaks and changes in shipping demands, can aid in the avoidance of inventory and transportation cost issues.

Kenco_ReduceSupplyChainCosts_r1_3 - Visibility Graphic


Kenco_ReduceSupplyChainCosts_r1_4 - Technology

Kenco_ReduceSupplyChainCosts_r1_4 - Technology Graphic-1Another way that organizations can cut costs is by implementing new technologies. New technologies may cost more in the upfront but typically the return on investment is high and can save companies thousands of dollars. Some new technologies that have recently surfaced that are saving 3PLs money include the lithium ion battery, manned AGV forklifts and automation tools.

Cost saving is an important aspect of any business, but it is important to not cut corners when trying to cut costs. Every aspect of the supply chain should be open to investigations, as uncovered revenue opportunities could be substantial. It is in an organization’s best interest to examine everything from your logistics providers and shipping methods to the placement of inventory in your warehouse. Chances are you’ll be surprised at just how efficiently you can run your business while reducing costs at the same time.





Jason Minghini

Written by Jason Minghini

Vice President, Best Practices at Kenco Group


We'd like to hear about your supply chain and discuss ways Kenco can help address your business needs.

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Kenco provides integrated logistics solutions that include distribution and fulfillment, comprehensive transportation management, material handling services, real estate management, and information technology—all engineered for Operational Excellence.