report, Best Practices, benchmarking, supply chain
Supply chain excellence: Tactics that save costs
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More than 80% of supply chain executives report outsourcing supply chain functions help reduce costs, improve efficiencies, enhance customer satisfaction, increase revenues or improve competitiveness.
According to research by consulting firm Best Practices, LLC, benchmarked companies outsource supply chain functions to save an estimated 10-20% of costs and enable improved customer service. For example, outsourcing helped a leading automobile manufacturer to reduce its inventories by $1 billion, trim inventory carrying costs by $124 million and decrease delivery times to dealers by 26%.
Best Practices, LLC's benchmarking report, Supply Chain Management Best Practices identifies tools and tactics leading companies use to manage supply chain costs. Areas of focus include: overall supply chain costs, order management costs, material acquisition costs, inventory carrying costs, supply chain finance and planning cost, supply chain IT savings and procurement department staffing and savings. Information in the report was drawn from primary and secondary research of more than 100 companies.
For example, the following findings emerged from this research:
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- Order Management Costs: By integrating order management and parcel manifest programs, a leading company was able to: reduce picking staff from 45 FTEs to 18 full and part-time employees, increase productivity from 15.46 to 30.54 orders shipped per man-hour and achieve a fill-rate accuracy level of 99.76%.
- Material Acquisition Costs: Top companies use reverse auctions to reduce supply costs. In fact, savings for one company were estimated at about 22% per auction, with about $40 million saved during the first year.
- Inventory carrying costs: 11% of benchmarked companies report inventory costs 10% or less of total supply chain costs.
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