Your supply chain might be losing money. Yes, it’s leaking profit!
But where are these leaks, and how significant are they?
Thankfully, these leaks are usually easy to fix.
Let’s hear from Rob O’Byrne to find out if your supply chain has any leaks.
Identifying Profit Leaks in Your Supply Chain
Your supply chain might be leaking profits, and I’m confident about this based on extensive experience with numerous companies. Whether your business has a turnover of $1 million or $40 billion, negative margin customer orders are common. This week, let’s explore how to identify and address these profit leaks.
Supply Chain Leak Quiz Preparations
I’m currently on the road, in a hotel room in Perth, Western Australia, visiting our consulting clients. Despite the makeshift setup, I wanted to discuss this important topic. We’ll go through a quiz together to help you determine if your supply chain is experiencing cash leakage. Grab a piece of paper and a pen, and let’s get started.
Quiz Questions
1. Do your customers vary by only about 100% in terms of their average order value?
Typical supply chains have orders with significant variation, from $100 to $10,000 or more. Answer yes, maybe, or no.
2. Do you have one standard service offer for all customers?
Consider if your service offer is consistent, like same-day delivery or three-day delivery for all customers. Answer yes, maybe, or no.
3. Are all of your customers in a similar market segment?
Assess if your customers belong to the same market segment, such as all consumers or all business distribution centers. Answer yes, maybe, or no.
4. Are all your products a similar size and weight?
Reflect on whether your products have a consistent size and weight, from small items like pens to large items like ladders. Answer yes, maybe, or no.
5. Is your customer service offer clearly communicated and followed by your customers?
Ensure that your customers understand and follow your service terms, such as order cut-off times for next-day delivery. Answer yes, maybe, or no.
Watch the video for the remaining questions and to understand the results.
I hope the survey has provided some insight into how your business manages visibility into customer and product profitability. These questions come from a short online survey we offer. You can take it by following this link: https://supplychainprofit.scoreapp.com/
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?“.
