How to Save Money in Your Supply Chain

The supply chain is all about the steps it takes to get a product into the hands of your customers. If you’re a business owner, you probably know all too well the pain points you’ve dealt with in your supply chain.

Vendors or suppliers provide the raw materials. The next step is manufacturing the raw materials into products. The last step is selling and distributing the product. What could possibly go wrong?

A kink in the chain can cause all sorts of problems, including delivery delays and, ultimately, loss of business.

If you’ve ever taken a hard look at your current supply chain system, there are probably areas for improvement. Here are a few tips for your consideration:

Inventory Management Strategy

Controlling inventory can be an intricate, perplexing, and time-consuming process for businesses. But with the right methods in place, you can improve efficiency and cut costs along the way.   

There are various ways to manage your inventory, including only ordering units to meet customer demand; ordering more stock once the current stash is gone; keeping a minimum of stock on hand; monitoring inventory and keeping a fixed quantity on hand (which assumes there’s a constant demand); or some combination of methods. You want to be careful of buying in bulk at a discount because the savings to you might not materialize if you don’t end up selling the product.

Choosing the “right” inventory control system involves these basic elements:

  • The right amount of product
  • At the right time
  • At the right place
  • At the right price

You’ll be setting goals based on your understanding of your current situation, then you’ll need the right processes and tools in place. The old spreadsheet form of tracking probably won’t cut it anymore, so you should look at a cloud-based inventory management system that pairs with an automated accounts payable system and the other systems you need in place to function as a business.

Accounts Payable and Inventory Are Intertwined

Accounts payable is the amount a company owes suppliers or vendors. Inventory consists of the raw materials or merchandise. If you look at your company’s balance sheet, accounts payable and inventory are both on there. Inventory is a cost but is considered an asset on the balance sheet. Purchasing goods through accounts payable is considered a liability on the balance sheet. Both need a keen eye, however, because they show a business’ financial picture on a daily basis.

“Making sure that you pay suppliers on time could help you to acquire supplier credit to purchase additional inventory,” according to “Keeping track of inventory turnover ensures that the business does not run into a credit crisis.”

To keep better tabs on inventory and accounts payable, you could integrate the two systems to help you optimize inventory, provide inventory visibility to supply chain partners, reduce labor expenses, and show accurate account reporting, to name a few.

If you’re really focused on streamlining your supply chain, it may be beneficial for your company to combine the two separate but interrelated systems. Automating parts of your supply chain can free up time and workload.


Unless you have the whole supply chain completely dialed in, it makes sense to outsource some non-core duties to an experienced third party, which frees you up to focus on the stuff you’re really good at.

According to a recent article on Staff Management some companies need operational expertise, so they turn to outsourcing firms to improve business processes, while others are finding that outsourcing experienced warehouse staff is the way to go.

While it’s not a new concept to outsource; it makes sense to hire people who have more knowledge than you do. According to a report published in the State of Outsourcing, Shared Services and Operations Industry, 37 percent of companies outsource their supply chain and logistics, up from 21 percent in a 2013 survey.

Overseeing a supply chain isn’t an easy undertaking, but once you have systems, processes and money tracking in place, you’ll be better prepared to meet consumer demand and not lose business in the process.



This site uses Akismet to reduce spam. Learn how your comment data is processed.