Now, if you're working in supply chain
management, one of the things that you're
constantly striving to do is to save
cost. So let me give you three or four
pointers that I found over the last 20
years or so that in most businesses will
help you save costs in your supply chain.
Hi, this is Rob O'Byrne from Logistics
Bureau and I thought we'd get out of
the studio today and actually get out
into Parramatta Park and get a bit of fresh
air.
I came out here, it's seven in the
morning, I thought it'd be nice and quiet
but there's all kinds of really cool things
happening in the park. We got all the cyclists
out and lots of runners and we've even
got a group of people doing Tai Chi, let me
just swing around here, so you can see them
behind me, so what we'll do is we're
going to find a quiet spot and I'll give
you those tips on saving costs in your
supply chain.
Okay, so we've found somewhere a little bit
quieter. This is a cute little cottage
right middle of Parramatta Park, if you
live in Sydney, you really ought to get
out and have a look at Parramatta Park,
it's a really cool place. Okay, so reducing
costs in your supply chain.
Let me give you three or four key areas
where you can reduce supply chain costs,
and this is based on working on about
1,400 projects all around the world
helping people reduce costs. So, number
one, you need to know your costs in the
supply chain. That might sound like a
really dumb question, but the first thing
you need to do is to establish those
costs and really understand them in
detail, and the best way to do that is a
cost to serve analysis. If you've never
done a cost to serve analysis, it's not
that hard to do, and in fact if you jump on, I'll
give you a link to some some blog posts
later, which tell you exactly how to do it.
You basically need to understand what
is the cost for your business in
delivering each of your different
product types to each of your different
customer types, now it's really important.
So imagine, what have I got in my pocket? Imagine
we're selling mobile phones, if we're
selling these to individuals all over
the country and we're sending them out,
you know, in Korea overnight or
whatever, that has
certain cost. If we're selling them to
retailers in boxes of ten, that's going
to be a cheaper cost, because we're still
processing just one order. It's going to
be a lot less warehousing cost because we're
just picking up a case of 10 and we're
sending that out. If we're going to be
sending them out, you know, by the
hundreds, so our ncost per unit is a lot
less. Phones are probably not a great
example because people buy them
generally individually, but you get the
idea.
You need to understand the cost to serve
all the way through your supply chain.
That will throw up all kinds of
opportunities, it's going to peel back the
onion for you, so you can see really
where you can reduce those costs. And
what are some of the things that are
going to help you reduce costs? Let me
give you a couple of those, because when
you when you find those high cost areas,
you want to try and reduce them. One is going
to be order size and related to that is
customer service offer. If you've got a
blanket customer service offer for all
your customers, I'm going to say it's wrong.
If you want to disprove me comment below,
but it's probably wrong
I've never seen a business where one
customer service offer fits every single
customer.
Having said that, I mean pizza delivery or
something, I don't know, but it's very, very
rare, so you need to understand your
service offer and how that
drives cost and the key thing there is
order size and frequency because that
has an immediate impact on your cost to
serve, so establish cost to serve, look
at customer service policy. Next one, if
you're not doing sales and operations
planning, you probably should be. Again,
very few businesses don't benefit from
that and if you're not sure what sales
and operations planning is, it's
basically a planning process that goes
right across all the key functions in
the business to enable you to
forecast your demand accurately, look at your
supply and kind of load balance all
of that and make sure that you're
offering the best service in the most
efficient way. So cost to serve,
understand order profiles, sales and
operations planning, we're probably then
getting down into the nitty-gritty of
actually how you're moving product. Your
warehouse can be very inefficient, so
have a look at the flow through the
warehouse,
and maybe you haven't done slotting in
the warehouse, if you don't know what
that is,
I've got some articles on the blog, and
look at the different storage and
picking media that you're using, and then
in terms of transport,
that's probably another key one, and what
people try to do is they go and beat up
their transport companies to try and get
a lower unit cost for their transport.
That often doesn't really give you any
benefit, because transport isn't a high
margin business anyway and it's very
competitive. Where people are generally
paying too much for transport,
it's because they're buying the wrong
service, so just think about that for a
minute. Are you sending things overnight
when actually you know two day service
would do?
Are you sending it out you know to be
delivered within a couple of hours by
courier when next day would do? And so those
are the sorts of things to look at in
transport, what service are you actually
buying. Okay, so there's some quick tips on
how to reduce costs in your supply. I'm just
gonna raise my voice a bit because we've
got the peloton going past, it's a very popular
cycling area here, so there's some tips
on how to reduce costs in your supply
chain, understand the costs through cost to
serve, and then start getting into things
like S&OP, and looking at
network, and warehousing, and transport,
and so on.
Now that was just a very quick summary,
if you want more information on this,
I've got loads of it for you, just go on to our
blog, you may be watching this on the
blog, but if not, go to logisticsbureau.com,
and on the homepage there, there's a button on
the top right which says blog, go in
there and it's all sort of categorised as
articles, and videos, and guides, and all
sorts of things. Years and years worth of
material there and I'm sure you'll find
what you want. If you happen to be
watching this and you live and work in
Sydney, then there's an even better way
that I can give you more information,
because on the 26th of
October, I'm actually running a full day
coaching program in Sydney 26th of October in
Sydney, it's $87 for the
day, it's a charity event so the
$87 dollars will go to charity.
It's fully-catered and what I've done is I
brought in 20 experts from all areas of
industry
to help share their knowledge with the
people who are coming along for the day.
And it's not kind of sit there and death by
powerpoint, not at all, it's all
small-group coaching tables, different
topics, different tables, you pick what
you want to know more about, if it's
warehousing or sales and operations
planning, I've got a fantastic guy on
sales and operations planning coming
along.
You just move around through the day and
they'll be little many presentations and
discussions, and it'll been awesome day, so
come along to that if you're in Sydney
on the 26th of October.
I'm just going to have a quick look at my
phone because I've got this fantastic
little app from Eventbrite that tells me how
the booking's going, and we've got 21
tickets left, so I'll make sure there's a
link if you want to come along to that,
and a link to the blog. So, saving costs
in your supply chain, a few pointers, lots
of information on the blog, come along to
a full day coaching if you want to learn
more.
I hope that was helpful.