How Can One Reduce Their Logistics And Supply Chain Cost


Logistic and Supply Chain Management

June 12, 2019

Logistics and Supply Chain costs can account for a large part of your company expenses. If these expenses are handled wisely, then one can increase their profit without even increasing sales. On the other hand, inefficient planning of logistics can considerably increase expenditure, leading to problems in meeting deadlines and – in certain cases – cause serious damage to goods. Hence, supply chain optimisation should be amongst the top priorities for any business.

A thorough analysis of your supply chain can reveal a variety of opportunities to cut down costs. These opportunities arise from simple loop-holes that can be filled quite effortlessly. Here is a rundown of a few tips that can help you significantly reduce your supply chain costs.


Although having a single supplier for every item in your supply chain might seem like the more convenient option, it can add to supply chain expenses. Having multiple suppliers encourages competition and can, therefore, reduce costs. In addition to this, having multiple suppliers also reduces the possibility of being unable to source crucial supplies.


Customer demand play a key role in supply chains. Demand Chain Management or DCM is a process which looks at supply chain management with a special focus on customers. This process fills the gap between supply and demand and can be very important in reducing supply chain costs.


In addition to making tasks more time-efficient and reducing manual effort, automating operations can reduce supply chain costs to a large extent. Automation reduces the possibility of errors and, hence, avoids the need for redoing a particular task. In addition to this, automation can reduce energy costs, labour costs, and overhead costs considerably, reducing the overall supply chain expense.


When it comes to goods, damaged products can noticeably increase supply chains costs. Keeping this in mind, one of the best ways to protect goods from damage is through proper packaging. Well-packaged products are less likely to get damaged when they’re getting shipped.

MANAGE THIRD-PARTY INVOLVEMENT                                

While it is understandable that it’s simply not possible to manage all operations in-house, it is important to optimise the interference these third-party vendors will have on the functioning of your supply chain. It is a good idea to reduce third-party interference and utilize these services only when absolutely necessary.


In order to evaluate whether or not your supply chain is functioning effectively, there has to be a way to measure its pros and cons quantitatively. Such a derivation is essential to determine how much money you’re saving. This can be done by evaluating critical performance indicators and comparing them to the designated goals.

It is certainly possible to reduce supply chain costs, and with these tips, you’re on the right path. However, this is just a drop in the ocean. Institutes like ILAM and ICRI are providing detailed courses in this domain in the form of a BBA in Logistics & Supply Chain Management  and MBA in Logistics & Supply Chain Management . Through these courses, one can acquire the skills which are needed to build an efficient and cost-effective supply chain.