To save time and money, having the best cost strategy for your business is critical.
The five strategies below are designed to help all businesses. However, each business is unique, and so it’s essential you tailor these suggestions to your organization.
Let’s not waste any more time, and dive straight in.
1. Customer Satisfaction
Number one for any business is customer satisfaction- cost reduction must be secondary to this. However, as you will read, the two don’t have to be against one another, and reducing costs can actually increase customer satisfaction.
Give your customers what they want, and not what you think they want. Your first step is to establish what your customer’s requirements are. Don’t add on additional costs because you think that’s what the customer will want.
An example of this is if a business offers free next-day delivery to all customers. Not only does this put a lot of strain and pressure on your employees and transporters, but a lot of customers don’t want or need the product the next day.
By doing a next-day-only delivery service, you are overserving and upping your costs but not reaping any benefits. By all means, offer the service for an additional fee or with a subscription cost, but assuming all customers want next-day delivery is a costly mistake.
2. Packaging Waste
Saving resources has never become more important. Many companies have got a lot of complaints about their unresourceful and inefficient packaging.
There are several problems with packaging waste to consider:
You’re Inconveniencing the Customer
Who wants the hassle of discarding a lot of unnecessary packaging? By creating more work for the customer, you are reducing their satisfaction, which will make them reconsider buying from you again.
Also, if the order is small, customers may assume that they don’t need to be home for delivery. If the item’s poorly packaged and the customer isn’t home, you will need to organize a redelivery. Inconvenient for both you and the customer.
Should be a no-brainer. Not only should we all make an effort personally with the environment, but it’s also vital for businesses to do their bit too.
Think of it from a business perspective, too. Your business will be more appealing to customers if it is environmentally-conscious and makes an effort to confront packaging waste.
It Costs More
This is the cruncher. By reducing packaging, you will reduce your costs. By only ordering the minimal packaging required for the safe transportation and delivery of a product, you’re efficient and thrifty. Win-win.
Placing and accepting an order can have unexpected costs attached to it. This is because behind the scenes, the work of issuing and managing invoices, arranging delivery, checking the process, and dealing with customer queries or complaints, all adds up.
To have the best cost strategy, you first need to estimate how much this costs. You can do this by tracking the work-flow. This starts with the arrival of supplies, then moves to the ordering of products, and finishes with invoicing and delivery.
Of course, the work-flow may itself hide expenses, inefficiencies, and complications. But by tracking the process- from supplier to customer, you will be able to find any incompetencies or cost-producing flaws.
Also, your team needs to share information cohesively. Many problems come down to the simple issue of bad communication and lack of information-sharing. Be sure to encourage and help maintain that people working for you work together.
Checking stock, or taking inventory is a crucial part of any business. If you don’t know what you have, how can you efficiently sell or re-order? Many people tend to buy because they “might” need it; this is not cost-efficient.
Many companies use the system of “cycle counting” to manage their inventory. There are two main ways to do this accurately:
Sheet-to-floor: This is where you take the data from your system, go into your warehouse, and compare what’s on the sheet to what you find in the warehouse.
Floor-to-sheet: This is where everything in the inventory is counted first and compared to what your system thinks you have. This strategy may seem more daunting, but it is more assiduous.
Some businesses only do a physical inventory check once a year, but this isn’t recommended. Know what you have, know what needs replacing soon, and know what sells fast so that you can make sure demand is supplied.
5. The Best Cost Strategy Involves a Better Storage Strategy
If you want to save money in your supply management, you need to know what you have in stock (see above) and how to store what you have efficiently.
By using too much space, employees will spend an unproductive amount of time trying to find an item. Both of these things will cost you money. By utilizing space and stock information more systematically, you can achieve savings.
Also, be aware of the movement of stock. As mentioned before, know which products sell (move) fast, as you can then order them later and store them for less time. This saves on inventory holding costs and decreases the risk of loss or damage.
Ready to Enhance Your Cost Strategy?
To optimize the best cost strategy, you need to tailor supply management to your own unique business. Work with the specific characteristics and needs of your own organization.
It’s good to compare the different techniques and solutions available, but be sure to create your own supply management.
If you would like more information about this topic, please feel free to contact us.