Reducing supply chain inefficiencies can result in cost savings

Supply chain optimization is critical for many companies. Managing sourcing, procurement, production and logistical operations can be extremely difficult, especially if a business has a complex supply chain that expands across the world. The more complicated and far-reaching these supply chains are, the greater chance they have of including inefficiencies that can be detrimental to a company. 

Eliminating inefficiencies

Many firms may not even realize their processes are filled with inefficient procedures that cost both time and money. However, some automated processes may be able to help some enterprises reduce their resource-draining processes and enhance operations. Automated notifications and orders can be one way for a firm that tends to procure and ship the same amount of materials or product on a consistent basis to cut down on time spent ordering or approving shipments manually. Similarly, automated reporting and document uploading processes can cut down on time, allow businesses to keep better track of important records and maintain maximum efficiency at all times. 

Some inefficient processes the result of global business

However, some inefficiencies may be outside a company's control. A new report released by the World Economic Forum in collaboration with Bain & Company and the World Bank revealed supply chain barriers in the form of border administration, telecommunications and infrastructure put a huge strain on companies and the global economy. The reduction of such barriers could increase the global GDP by 4.7 percent and world trade by 14.5 percent, according to the research. That would be a much larger benefit that eliminating all trade tariffs, which would only be expected to increase global GDP by 2.6 percent. 

Reducing supply chain barriers could effectively save time, allowing companies to ship goods more quickly, deal with fewer regulations and tighten their schedules in order to remain competitive on a global scale.

"Supply chain barriers are more significant impediments to trade than import tariffs," said Bernard Hoekman, director of the World Bank's international trade department. "Lowering these barriers will reduce costs for businesses, and help generate more jobs and economic opportunities for people."

Because these resource-wasting processes are often outside a company's control, it may benefit from eliminating other inefficient processes it can identify and avoid. Doing so offers significant cost savings potential and can result in better business strategies that may give a firm more of a competitive edge in the marketplace.