The Background
The American Productivity & Quality Center (APQC) defines total supply chain management cost as “the sum of the costs associated with the processes to Plan, Source, Deliver, and Return product, and is calculated as Sales - Profits - Cost to Serve (e.g., marketing, selling, administrative).”
A company that manufactures its products in China is seeking to increase its profitability, but it’s facing rising shipping and distribution costs in the United States and Europe. Therefore, managing supply chain costs is a clear target.
The Challenge
In-house supply chain management is fraught with challenges both predictable and unpredictable. The costs for logistical tasks rise and fall with employee productivity. Training, shift meetings, other company functions—each increase operational costs, and each have a direct bearing on how employees are approaching their work. Supply chain managers must continually invest in capital and maintenance to keep equipment functioning at its most efficient capacity. Industry advances facilitate the need for enhanced equipment and qualified personnel. Invoice inaccuracies and shipping delays often necessitate restitution to preserve customer good will.
Inventory, sampling, overhead, staffing, and safety risks increase insurance premiums. Costs associated with the supply chain pile up and can cause a financial strain.
In-house supply chain management is a cost-intensive process that leaves many opportunities for errors to occur that can result in additional expense. It is a time-draining, demanding task that occupies many resources. Resources that could be applied elsewhere to promote the organization’s core strengths and boost productivity, performance, and quality. However, enlisting the services of a professional supply chain partner can dramatically reduce these costs, both qualitatively and quantitatively.
The Solution
Logistics Management reported that “90% of Domestic Fortune 500 companies rely on third-party logistics providers for outsourced logistics and supply chain services.” In addition to reducing costs, there are other motivations for outsourcing supply chain, including:
- Providing customer service improvements.
- Increasing access to resources necessary for expansion.
- Allowing for flexibility and a more variable cost structure.
- Avoiding the need for specialized equipment, assets, or technology.
- Removing expensive and unreliable transportation costs, which generally make up between 40 to 60% of supply chain costs.
- Securing scaleable warehouse capacity without a major capital investment or a long-term leasing commitment.
When you remove services not core to the business, improvements can be realized across many facets of your organization, including labor freed for more urgent tasks, achieved project deadlines, enhanced customer relations, access to talent, expertise and technology, the capacity for accelerated growth, and of course, reduced costs.
The end-result? Reduced costs and accelerated growth.
Reduce Supply Chain Costs with Tessco
Why make unnecessary costly investments in secondary systems, processes, capacity, and staff? Why apply band-aids to a flawed system that can be managed and continuously improved on by experienced professionals? With proven efficiencies in supply chain distribution, Tessco is well-prepared to alleviate the complexities by becoming your supply chain management provider.
For more than 35 years, Tessco has set the pace as the leading value-added distributor to the wireless world. Distributing over 50,000 diverse products to thousands of consumers each year, Tessco is proud of the partnerships we have established with our customer base of industry-leading manufacturers. Our robust processes and our team of experienced supply chain professionals specialize in supporting the efficient movement of goods. Tessco can provide our manufacturing partners with speed-to-market channels that propel productivity and reduce total supply chain management costs.
With Tessco as your partner, we assess your supply chain needs and then provide total solutions or implement strategies to improve and fill gaps within in-place systems. Either way, we will enable seamless product fulfillment capabilities that will allow your organization to focus on essential core competencies, such as design, engineering, manufacturing, or sales, while reducing costs.
You’re the expert designer, engineer, manufacturer, seller—with Tessco handling the logistics of your supply chain, you can be sure that your goods are packed, tracked, and delivered on time.
