A recent article in Logistics Management contained 6 Network Redesign Tips designed to help you reduce distribution costs. The following three tips are particularly relevant regardless of the type of supply chain you operate:
- Being Green Can Bring More Green
If it’s truly green, it saves you money. If a solution that purports to be green increases costs, then you can be sure it’s another example of greenwashing, because truly green solutions reduce the requirements for energy, water, and other natural resources, which ultimately decreases costs. Examples given in the article include replacing high-intensity discharge lights with energy-efficient fluorescent lighting, installing solar panels, and utilizing fans for air circulation, but there are dozens of ways you can reduce costs. See the green and sustainability archives for other items.
- Get Creative With Transportation
As per the article, start by finding ways to eliminate empty miles and increase truckload utilization, but don’t stop there. It’s not just plane, train, and truck … there’s also bus and even automobile. Busses often have empty space and are used in some countries regularly to haul small loads, and sometimes you should off-load your smaller shipments to Fedex and UPS who use smaller, energy efficient vehicles.
- Create an Off-Shore, On-Shore, Near-Shore Blend for Flexibility
The last thing you want to do, as a result of a supply disruption in your factory half-way around the world, is expedite multiple shipments by air that would normally go on a single ocean carrier. Not only does this send transportation costs sky-high, but it can also increase your carbon footprint. (Yes, ocean carriers, which aren’t subject to the same clean-air requirements of land-based vehicles, are dirty … but your footprint is often just a fraction of the carbon-produced as you’re sharing the load with dozens [or hundreds] of other shippers. However, if you’re filling multiple planes worth of merchandise, that carbon footprint adds up fast.) However, if you also sell into foreign markets, the last thing you should be doing is on-shoring everything. The best strategy for today’s multi-national is a blended strategy. This will minimize disruptions and costs.