Your supply chain might be wasting money without you realizing it. It is losing profit!
But where exactly are these leaks, and how significant are they?
Fortunately, these leaks are often straightforward to address.
Listen to Rob O’Byrne to discover if your supply chain has any hidden leaks.
Your Supply Chain May Be Losing Profits—Are You Sure?
Can you be confident that your supply chain is leaking profits? I’d say 99.9% yes! Having worked with countless companies over the years—ranging from $1 million to $30-$40 billion in turnover—I’ve seen firsthand how customer orders can end up being money losers.
You might think, “Isn’t that expected?” But how do you measure the extent of cash leakage in your supply chain? That’s what we’ll explore.
Supply Chain Leak Quiz
We’ll walk through a brief quiz to help you assess whether your supply chain is experiencing cash leakage. Grab some paper and a pen. I’ll interpret the results at the end. Ready? Let’s dive in. And feel free to share your thoughts in the comments below. I’ve got 9 simple questions for you to answer with yes, maybe, or no. We’ll tally them up at the end.
1. Do your customers have similar average order values?
For example, if most orders range from $50 to $100 or $500 to $1,000, there’s not much variation. If your orders vary widely, from $100 to $10,000 or even $500,000, you’ll likely answer NO.
2. Do you offer one standard service level for all customers?
Is your service offer consistent, like “order today, get it tomorrow” or “order now, get it in 30 minutes”? Yes, maybe, or no?
3. Are all your customers in similar market segments?
Does your business serve only one type of customer, such as all retail stores or all consumers? Yes, maybe, or no?
4. Are all your products similar in size and weight?
Do your products range from small items like pens to large ones like ladders? Yes, maybe, or no?
5. Is your customer service offer clearly communicated and followed by customers?
Do your customers understand and adhere to service terms, like next-day delivery cutoff times? Yes, maybe, or no?
6. Is your customer service offer clearly communicated and followed by your team?
Do your team members strictly follow service policies, or do they sometimes make exceptions? Yes, maybe, or no?
7. Do you have products that require special handling?
Are there items needing temperature control, special handling, or are they fragile? Yes, maybe, or no?
8. Can you isolate logistics costs such as transport, warehousing, and picking?
Are you able to clearly identify costs associated with different logistics functions? Yes, maybe, or no?
9. Do you have visibility into cost metrics like order processing, pallet storage, and picking?
Do you have detailed insights into these specific costs? Yes, maybe, or no?
Want to see how your answers stack up? Check out the full video above!
This quiz should give you an idea of how well you understand your supply chain’s profitability. For more insights, visit: Supply Chain Profit Survey.
Related articles on this topic have appeared throughout our website, check them out:
- Energy and Labour Costs: 2 Top Warehousing Challenges in 2023
- Cost to Serve Analysis—And the Costs of Neglecting It
- How to Operate Your Distribution Truck Fleet at Less Cost
- Cost to Serve – A Smarter Way to Improved Supply Chain Profitability
- Reverse Logistics Management for Supply Chain Cost Reductions
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated December 06, 2023, under the title “Is Your Supply Chain Leaking Cash?“.
