Companies across supply chain look to cut costs in tougher 2020 environment
Two thirds of retailers, suppliers and manufacturers see cost reduction as their biggest challenge this year
Tougher conditions for the transport and logistics sector is pushing companies to more lean operations and adopting cost-cutting strategies, according to the eft’s new Supply Chain Hot Trends Report: 2020 & Beyond, which is available for free download now.
In the report’s survey of 600 supply chain professionals, 66% of retailers, brands, and manufacturers said cost cutting was a key priority. Strategies to reduce costs include adopting technologies in the warehouse, and using fixed, scheduled delivery routes.
There are multiple drivers of cost concerns that mark it out as a key trend in 2020, with overcapacity in bulk shipping squeezing profitability but at the other end in the last mile, complexity, expectations and rising demand are creating cost pressures.
In this last mile section of the shipping process, respondents to the survey noted that the top two challenges were achieving suitable agility and flexibility in adapting to customer demands (24%) and reducing overall cost (22%). Related to costs, 19% also said that improving delivery efficiency is a key concern.
Looking at the efficiency measures most often used by supply chain operators, 33% responded that using fixed, scheduled delivery routes was a key measure being used to reduce costs in the e-commerce supply chain. Companies were also using a variety of secondary tactics to reduce costs, including the use of local convenience stores for collection and delivery (14%), lockers as a drop-off point (10%) and/or brick and mortar locations as fulfilment centres (24%).
The greater employment of stores will be another key trend that marks 2020, as many companies seek to position key product closer to their urban customers and reduce the length of the supply chain for key consumer goods. Alongside purpose-built urban warehouses, more companies will leverage their already owned space in these environments to acts a micro-logistics centres.
For more on the trend shaping logistics in 2020, click here to download the report for free.