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3 Effective Strategies for Sellers to Reduce Supply Chain Expenses
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3 Effective Strategies for Sellers to Reduce Supply Chain Expenses

Maximize efficiency in the early stages to position your business for success

In recent years, businesses have faced numerous challenges that have demanded resilience and adaptability. However, amidst difficult times, there are valuable lessons to be learned. One crucial lesson that many merchants have discovered is the significant impact of their supply chain strategy on operational costs. Achieving long-term savings requires the implementation of sustainable cost-reduction measures in supply chain management. One effective approach to ensure success is optimizing processes in the early stages of the supply chain.

Streamline kitting and assembly procedures
The more time, effort, and materials required during the fulfillment phase to prepare online orders for shipping, the higher the associated costs. This particular stage, known as kitting and assembly, involves consolidating individual items into a single package. This service is often necessary due to manufacturing or shipping requirements, or specific promotions that demand special packaging. The primary objective is to create ready-to-ship sets as soon as an order is placed. Kitting and assembly encompass various packaging preparations, such as barcoding and serialization, package inserts, branding components, item additions or removals, wrapping, and more. The complexity of these preparations depends on the brand and product. Whenever feasible, it is advisable to complete kitting and assembly at the manufacturing stage to ensure that kits are promptly received and stored by the logistics provider, minimizing additional time and expenses.

Utilize barcodes on packaging
Barcodes play a fundamental role in inventory management, ensuring security, organization, and efficiency within warehouses. Third-party logistics providers (3PLs) utilize barcodes to track all inventory items entering their facilities. Barcode scanning is significantly faster and more efficient compared to the manual entry of letters or numbers. By incorporating barcodes on the boxes shipped to your fulfillment center, the need to open each box to identify its contents is eliminated, reducing labor costs. While individual units within the warehouse possess their own location barcode, integrating barcodes on shipping boxes optimizes inventory identification and ultimately saves money.

Implement prepackaging for complimentary items
Product bundling, a proven marketing strategy, involves offering related products together at a discounted price. To capitalize on this approach, manufacturers can ship bundled items in the same box directly to your 3PL, or the 3PL can bundle and store the items upon receipt. By doing so, you can minimize picking and packing costs. This method contrasts with an order-based approach where items are displayed online as a bundle, but the 3PL receives separate line items that must be individually picked and shipped together. Collaborating with your suppliers and 3PL throughout the supply chain enables you to identify opportunities for streamlining operations and eliminating unnecessary tasks, thereby generating cost savings.

By: Anna Victor


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