Streamline Your Business and Reduce Costs With These Simple Steps

Reduce Costs by Managing Your Supply Chain

reduce costs for businessBusinesses are always looking for ways to reduce costs and save a little money. When costs go up and income sags, something has to adjust within your business if you plan to survive. One of the easiest ways to eliminate waste has eluded many business owners, however. Almost every business relies heavily on office supplies, from paper to toner cartridges, or any number of specialized supplies. The problem is that the market has only recently shifted in these areas, and businesses are not always aware of how this makes it possible to save money. The best values in office supplies are right in front of you—they’re available through countless websites you might not yet be familiar with. There are several ways that the supply chains have realigned and that it is much cheaper to purchase office supplies through online vendors.

Just in Time Inventory

The idea of just in time inventory was pioneered by Toyota, but has since spread across manufacturing, and has even made a push into retail. Storage space costs money and reduced warehousing can make a huge different for the bottom line, but what changed all of that is the perfect synchronization possible because of the internet. Where manufacturers used to deliver their products in huge quantities to be stored and delivered gradually, most companies now ask suppliers to deliver just before the products are needed. This has driven the next major change in shipping and delivery and has reduced costs substantially for many businesses.

Rapid, Inexpensive Shipping

Because of how many products are now being shipped for perfectly timed delivery, shipping costs have become incredibly cheap, even as transit times have gone down. If you’ve ever wondered how it became possible for so many websites to offer free shipping, this is the reason—more shipping means cheaper prices for everyone. Free shipping is also possible because more direct supply chains—the next reason.

Eliminating the Middle Man

On the older model, goods traveled from the factory to a distributor, who then sent inventory out to all the retail establishments. The transparency of the internet (and low minimum requirements of just-in-time delivery) have eliminated a middleman, since online retailers deal directly with the manufacturer instead of with a distributor. In some cases, shipping can even come in a single step: when you make your purchase, the online retailer sends the order to the factory, which ships the products directly to you.

Reduced Retail Costs

If you buy your office supplies at a physical store, your price includes the costs of the location, shelf space, staffing to stock and ring-up the order, and any other costs involved with retail. Online retailers pay only for their websites and the time to place your order. This means you pay for your product alone, without the extra costs involved in putting it in a store for you.

All of these factors boil down to a simple idea, fundamental to economics—the more waste you can eliminate and streamline the process, the more consumers benefit. In practical terms, this just means the next time you are looking for ink refills, the best place to turn is not your local office supply store. Besides saving the time we all waste, by arriving at retail establishments only to find out our cartridge is out of stock, you will also find that online retailers can offer noticeably more competitive prices on office supplies. The best values are right in front of you, all you have to do is click.

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9 Responses to Streamline Your Business and Reduce Costs With These Simple Steps

  1. AverageJoe 07/10/2012 at 1:18 pm #

    I love discussions about logistics and just in time! It’s always been fascinating to me how much money is wasted by unused inventory. Right now I’m wondering if/how this applies in personal finance to a kitchen pantry. Correlation? Hmm….

    • Paul 07/10/2012 at 4:14 pm #

      We just downsized a freezer in the garage and have cleaned out our pantries in the garage and kitchen. Can’t tell you how much money we had tied up!

  2. PadgettshCom 07/02/2012 at 5:58 pm #

    The less steps it takes to complete the task, the cheaper the process. This is just proof that businesses that embrace change and are constantly looking to be more efficient are the ones that stay ahead of their competitors.

  3. Tie the Money Knot 07/01/2012 at 10:10 pm #

    For such items, shopping online seems like the way to go. Couple those cost savings with good customer service, and you’re good to go. The concept of “showrooming” allows people to look in person, then make purchase decisions online for less!

  4. Edward Antrobus 06/30/2012 at 12:18 am #

    Free shipping is a sign of reduced shipping costs, but it is also a sign that their margin is high enough to absorb the cost. To ship an 8oz jar of taco seasoning, it costs me over $5!

    • Paul 06/30/2012 at 12:36 pm #

      It can be but most businesses that offer free shipping build that into their cost structure. We have a small business and offer free shipping. We built the cost of shipping into our prices but researched our competitor’s prices to make sure we remain competitive. Consumers are savvy and will find the best overall price.

  5. SB @ One Cent At A Time 06/29/2012 at 3:33 am #

    Dell is pioneer in implementing just in time inventory. For us small bloggers, don’t have to worry about those aspect of businesses.

    • Paul 06/30/2012 at 12:40 pm #

      JIT is used by businesses that manufacture a product and there are many degrees. Be thankful SB that we don’t have to worry about supply chains!

  6. Wayne @ Young Family Finance 06/28/2012 at 2:24 am #

    These are great ideas for a small business. Sometimes I wonder if physical stores will someday disappear altogether! It is so convenient to shop online. However, I think people like to be able to look at a product, and that desire will probably never go away. For small business owners who can afford to have a physical location, online business is a great way to supplement income.

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