Minimizing Supply Chain Costs

Posted by Kristen Melendez on Tue, Dec 17, 2013 @ 09:36 AM

 Minimizing Supply Chain Costs

Costs can add up quickly within the supply chain, particularly if things go wrong. The warehouse depends on the vendor to make sure the items they receive are correct and in good shape, and customers depend on the warehouse to get them the items they order. If something breaks down along the way, it throws a wrench into the operation. Most problems that could cost money, however, can be solved through compliance.

Vendor Accuracy

It’s on the vendor to ship items to the warehouse in a timely manner. Because we’re all human, there’s always a chance that something will get messed up, like the vendor sending a shipment of the incorrect item, or a shipment of an item in mixed colors instead of one color. If the original order comes in wrong, the availability of the product is harmed. While it’s the vendor’s job to make sure that they’re sending the right items, it’s also up to the warehouse to check that the order comes in correctly and quickly acknowledge the problem if it’s not right. If it’s wrong, it’s important to let the vendor know immediately so it can be corrected.

Vendor Returns

In some cases, items will need to be returned to the vendor due to flaws or incorrect items in the order. Because the vendors are often on the other side of the planet, these returns are pricey. Ultimately, it’s much cheaper to consolidate items over time that need to be returned to the vendor instead of wrapping up each incorrect item and shipping them when they come in. Shipping a larger package once a week or month is much cheaper than shipping smaller packages every day.

Rather than return them, other items that come in flawed may be repairable in the warehouse. For example, say a shipment of digital cameras comes in, but every package on one pallet doesn’t have an instruction manual. Instead of shipping all of the cameras back to the vendor, only to have them quickly insert an instruction booklet and ship them back, the vendor might send a number of instruction booklets to the warehouse and let the employees there correct the issue.

Reducing Back & Forth

It’s important to have a good working relationship with the vendor, but frequent back and forth communication takes time, especially when the vendor is 12 hours ahead of your time zone. By correcting any issues you can in house, you can reduce the back and forth communication. At the same time, by letting the vendor know there’s a continuing issue, you can ensure that they get it taken care of on their end, so the warehouse isn’t continually forced to make corrections. If flat-panel TVs continually come in without screen protection films, the manufacturer needs to know in order to keep their own costs down. By catching problems instead of letting them show, money is being saved across the entire supply chain.


The Costs of E-Commerce White Paper       Benefits of Outsourcing E-commerce Fulfillment and Returns Case Study

Topics: Returns, Supply Chain