How Supply Chain Visibility Can Yield Results
A company looked to identify major cost components associated with a supplier’s product pricing. Partnering with its integrated supply chain solutions provider on visibility initiatives, the company collaborated with the supplier and determined that products were shipping from forward storage warehouse locations. The company had no visibility to these underlying logistics costs nor were the warehouse locations optimal for its network. Items were also produced in multiple locations with many inter-plant transfers occurring in the supplier’s network.
By analyzing product volumes and logistics costs, various solutions were identified. Rather than using the supplier’s forward storage warehouses, product was shipped directly from production facilities to consolidation warehouses already utilized by the company.
Changing where product was warehoused, aligning production facilities to consolidation points and eliminating unnecessary transportation costs yielded significant COGS savings on products from the supplier. Savings resulted from reduced storage and handling costs, improved product routing, increased outbound product velocity from consolidation points and increased distributor inventory turns.