Your supply chain is costing you more than you think - and not just in cash

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4 Minutes Read


Procurement teams and Supply chain managers across industries are under pressure to cut costs throughout your supply chains and logistics. But the costs of your logistics go deeper than just financial. Ranging from human effort to time to more literal costs, all of these issues impact your bottom line. 

Because of that, there are a lot more ways to cut costs and protect revenue than you might think.

Understanding your baseline data

The first place that your supply chain starts costing you is in your data. When you don’t have clear visibility of your supply chain’s baseline status, you can’t make changes that will be effective and impactful. Here are three examples of how just getting clearer visibility can make a major difference:

One of our customers is a global pharmaceutical distributor. This company wanted better insight into what they were spending and where. Using the baseline and benchmarking part of our platform, they gained greater visibility of their shipments. This let them identify better services and lands and meant they now save £5 per shipment. They also identified their optimal rate cards, saving them £250k, over 60% savings per shipment.

Read more: How outcome-driven supply chains make stronger pharma companies

A major leisure brand has used our platform to identify 70% savings on third-country shipments. The platform helped them highlight savings of up to 70% across specific international lanes, driven by using a more optimal rate card. This has inspired them to create operational and procurement-led changes that can lessen the risk of something like this happening again in the future.

Working with a global CDMO, the 7bridges platform gave them some much-needed visibility into their complex network. After taking their data into the platform, we discovered that 39.7% of their lanes weren’t on rate cards at all. This meant that 12.5% of their total spend was happening as ad-hoc expenditures rather than through a more optimal procured rate card.

Find out more about how our platform can help you with your Baseline: Baseline and Benchmarking


Procurement - time and money savings 

Many businesses have whole in-house procurement teams to take care of the process. They spend their days making sure the company always has the best rates possible. But there is only so much they can do without access to more quality and granular data than they often have. 

For one high-end fashion brand, we identified that they could be saving 42% on their logistics costs if they embraced a multi-carrier model. Armed with the right knowledge, they were able to renegotiate and improve their relationships with their carriers. Armed with transparency and clarity of expectations as well as deliverables for both sides their incumbent carrier was able to revise their initial bid to be 20% lower. 

Procurement is a time consuming and costly activity, especially the data gathering part of the procurement piece. Currently, This is something that most businesses run as an activity. They need teams of people to prepare for each procurement activity for months, and then spend months running it. With 7bridges, we can help you treat procurement as a capability - a muscle you can flex and work out consistently, rather than distinct activities.

You can complete procurement processes faster and more efficiently, with a wider selection of potential providers that will save you time and money while increasing your effectiveness.

Within our platform, we see an average savings on procurement across all our customers of 29%. Some businesses even see as much as 47% savings! (That means effectively paying for 1 out of 2 shipments compared to the last year). Accessing and having the ability to really use your data can help every part of your supply chain team save costs. This will also enable you to run your procurement exercises faster and more frequently. 

Read more about procurement as a capability not an activity: Transport & Logistics Procurement

 

Direct savings through outbound automation 

Automation is one of those areas that we’ve all heard will cut costs, but it can be hard to envision where or how it should be used. And that makes imagining the savings you’d get from it very difficult. That said, implementing automation is an important part of a modern supply chain strategy. 

Businesses that use 7bridges for outbound automation, see an average of 16% direct savings on shipments. And that’s just through real-time shipment booking. Plus, those businesses also gain increased resilience to our turbulent landscape by overcoming disruption and ensuring delivery times are always maintained.

See how Automation can help you with your supply chains: Automation

 

Saving time to save costs 

For companies that haven’t fully optimised their supply chains, a lot of time is spent on manual tasks that could be done by a platform instead of a person. That would free the human up to do tasks we’re a lot more suited to, like creative problem solving or interacting with other people. There are a couple of ways we’ve seen this implemented really well:

One fast-moving consumer goods (FMCG) company we work with, used the data uncovered through the 7bridges platform to realise they were spending 10 hours every week checking all of the invoices that came in. That process is now automated through the platform and their team can do more exciting work.

Another quick-win area that we see automation successfully implemented is around GL coding. Managing these general ledger (GL) codes, which let businesses track financial activity, can be surprisingly time intensive. Customers who have automated this through 7bridges save 5-10 hours a week through this alone.

 

Saving costs to save costs

Sometimes, cost savings really is just about cost savings and trying to find every possible avenue for this. For one particularly cost-focused customer we delivered £27,800 saving. Which is effectively a warehouse worker freed up to focus on other more business-goal orientated tasks.

We also worked with a luxury fashion retailer to enable them to dispatch from store, giving rise to faster order fulfilment and reduced shipping costs. In cost savings, we saved £750k by giving them the ability to ship from store. This simultaneously made their logistics network more resilient and helps to protect future revenue from being impacted by disruptions.

 

Emissions vs. cost saving - finding balance

Increasingly, emissions reduction is something that supply chain leaders have to take into account. With more and more regulations and customer concerns about climate impacts, all businesses need to be looking at ways they can reduce their impact. And, because, an average of 80% of business emissions often come from the category that includes supply chains (scope 3), finding opportunities here is important. 

In a simulation we created, using anonymised customer data paired with our global benchmarking data, we discovered that the average pharmaceutical business in Europe can find an ideal balance between cutting costs and cutting emissions. In our simulation’s case, that meant simultaneously cutting costs and emissions by 19%.

Want to read more about balancing emissions and cost? Check out: The Green Ratio - the optimal path toward decarbonisation

As you can see, there are a ton of different ways your supply chain and logistics could be costing you. Time, money and emissions all make a difference to whether or not you hit your cost-saving goals. And all of them can be helped by the right data and the right platform. With 7bridges, you can start tackling these problem areas right away and identify the best way to streamline for your company and your network to meet your goals.

 

Read more about the story in:

Internet Retailing:

https://internetretailing.net/guest-comment-understanding-the-true-cost-of-poor-logistics-and-how-automation-can-help/

 


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