Supply Chain Costs – What They Are and How to Trim Them

Did you know most businesses waste up to 20% of their budget on hidden logistics slips? That money could be powering growth instead. The good news is you don’t need a PhD to pinpoint where the leaks are. Below we break down the main cost drivers and give you real‑world tricks to keep more cash in your pocket.

What Drives Your Supply Chain Costs?

First up, transportation. Every mile a truck travels adds fuel, driver pay, and wear‑and‑tear. If you ship small loads across long routes, those per‑mile rates explode. Next, inventory holding. Storing product ties up capital and racks up warehousing fees, especially when space is scarce. Then comes order processing – the time and systems needed to pick, pack, and label each item. Finally, returns and reverse logistics. Every returned parcel means extra handling, inspection, and possibly restocking fees.

Putting a number on each piece helps you see the bigger picture. A simple spreadsheet that records freight invoices, warehouse rent, and labor hours can turn vague concerns into actionable data. When you spot a spike, you’ll know exactly which line item to investigate.

Tips to Lower Costs Today

Start with route optimization. Use a free online tool or a basic GPS app to cluster deliveries that are close together. Cutting an extra 10 miles per trip can shave off 5‑10% of fuel costs over a month.

Next, rethink your inventory policy. If you’re holding a safety stock that never moves, consider a just‑in‑time approach with your suppliers. Even a 2‑day reduction in storage time can free up cash and lower rent charges.

Automate repetitive tasks. Barcode scanners and simple warehouse management software can speed up picking by 15‑20%, which lowers labor bills and reduces errors that lead to costly returns.

Don’t forget to negotiate with carriers. Most shipping contracts have hidden flexibility; ask for volume discounts or explore alternative providers for specific lanes. A 3% discount on shipping can quickly add up.

Finally, examine your packaging. Over‑sized boxes increase dimensional weight fees and waste space in trucks. Switching to size‑optimized cartons can reduce both shipping and material costs.

Applying just a couple of these ideas can shrink your supply chain expenses dramatically. The key is to track, test, and adjust – treat each change like an experiment and measure the results. Your bottom line will thank you.

StockOne Logistics offers tools and expertise to help you audit these cost areas and implement the right solutions. Whether you need smarter routing, better warehouse practices, or a full supply chain redesign, we’re ready to partner with you.