As a CFO in the manufacturing environment why should you be interested in your logistics and supply chain operations? In larger manufacturing companies with sales of $250 million and up that is not typically a domain that most CFO’s or other C, V suite level executives get involved in. The setup, implementation and management in these smaller firms is generally left to tactical managers who have expertise, knowledge and practical experience in that realm.
Smaller manufacturing companies often do not have the personnel resources to reap the hard and soft dollar benefits of a “best in class” logistics and supply chain management approach. Such an approach helps reduce costs of goods sold, days in inventory and overall hidden operational expenses Typically functional management in these smaller companies are relegated to a back room operation as these companies concentrate on their core business and growth within that core business. The opportunity costs can be significant and damaging to those smaller U.S. manufacturers who are trying to compete, excel and grow their market share in a space crowded with both domestic and foreign competitors.
While it is not realistic that CFO’s, CEO’s and other C, V suite executives in smaller U.S. manufacturing should become subject matter experts it is possible to consider outsourced solution partners who can help realize the hard and soft dollar benefits of a competitive advantage in logistics and supply chain,
Most tactical personnel in smaller companies who are assigned responsibility in these disciplines would rarely if ever consider an outsourced partnership of this type for a variety of reasons.
Here are some reasons why C, V level suite executives in this space should be interested in an association of this type:
- Reduced Freight Costs
A reduction of a net 20% or more in freight costs will improve Cost of Goods Sold. This is made possible through leveraged volumes utilizing name brand carriers who can meet or exceed your service requirements while insuring continuity or improvement in order fulfillment, inventory management and customer satisfaction. Reduction in freight costs are also further enhanced by an enterprise approach ather than a transactional approach to freight cost management.
- Realized Growth
Profitability enhances growth. A reduction of 20% or more in landed costs for inbound materials and outbound product sets the stage to allow you to compete in expanded geographical markets. An optimized logistics and supply chain function will help reduce the risks and barriers to serving your customers with maximum efficiency from order entry to cash and enhance your position as a preferred vendor, thereby achieving growth.
- improved Customer Service
The simply stated objective of getting the right product, to the right location, at the right time at the price quoted and in good condition can be difficult to achieve without the advantage of a well -designed and executed logistics and supply chain system. Improved Internal and customer visibility to order and shipment status combined with the right mix of quality core carriers with the most competitive costs and quickest and most reliable performance on transit times are just a few of the building blocks resultant from enhanced logistics and supply chain management. These building blocks go a long way to differentiating you from your competitors and gaining market share.
- Enhnced Planning & Visibility
In short Improvements in your logistics and supply chain management performance can dramatically increase your company’s operational efficiencies and maximize productivity. Real time information will result in more effective planning and allow you to anticipate the unexpected. Higher levels of customer satisfaction directly lead to closing the gap between your growth and revenue projections.
It’s a sad fact that more than 80% of smaller manufacturing companies do not have a logistics and supply chain strategy.
So what’s in it for C, V level executives to get interested in logistics and supply chain performance?
The answer is simple and compelling: A direct and positive impact on revenue growth, capital utilization and profitability. All of these improvements position your company as a preferred business partner and result in a significant competitive advantage.
Distribution Solutions, Inc. is a non-asset based Transportation Spend Management company providing freight rate analysis, negotiation and logistics and supply chain consulting services. 2014 is our 24th year of helping small to medium sized US manufacturing firms compete more efficiently in today’s extremely competitive market place. Contact us at 508-747-6200 Ext 14 for a no-cost, no-obligation freight cost assessment and analysis of your logistics and supply chain system. You may find out more about our services at www.dsi-tms.com