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Supply Chain: Cutting Costs, Cutting Carbon

By: Sum-Sum Chan
Posted: January 9, 2009, from the January 2009 issue of GCI Magazine.

Logistics management and supply chain strategy is an integral part of your business that can allow you to maximize spending, drive down costs and efficiently service your retailer base. However, it also has the risk of draining your capital and monopolizing your business’ resources. To further complicate supply chain planning, there are now numerous responsible choices that can cut your carbon emissions. So how can you dependably and rapidly deliver your goods cheaper while “going green?”

There are multiple levels of logistics complexity, depending on the size and stage of your business. Your logistics strategy will fit into one of a number of proven options, and, with successful implementation, could evolve from one solution to another.

Evaluating Needs and Performance

Small businesses are prone to the “truck for cheap” syndrome—making rapid business decisions based solely on price. Midsize businesses must consider more complex infrastructures, and they often neglect consideration of nontraditional options or cutting-edge practices.

For smaller businesses, logistics needs might revolve around frequent parcel shipments via FedEx and UPS, the occasional pallet to major retailers and the trade show booth to the next expo. Though they may be small, they are also at an advantage. By planning ahead, an entire supply chain could be mapped to build a solid foundation from the start—avoiding the mistakes that come with hasty growth.

Likely, small businesses primarily interface with carriers, so the most proactive step is tracking and managing these carriers’ quality—creating a matrix of score cards, if several are involved. Develop relationships now and set up a comprehensive way to measure carrier performance. Rate delivery costs, on-time performance, customer service, ease of claims processing (it is inevitable) and overall shipment transaction. It could be as simple as creating a check box hand stamp or as sophisticated as entries in a tracking system.