Cut supply chain and distribution costs with these easy tips

By Oleg Mikhailenko
Published in Solutions
June 20, 2022
3 min read
Cut supply chain and distribution costs with these easy tips

If you’ve looked at the news lately, you’ve no doubt seen countless stories about the breakdown of supply chain distribution on a worldwide scale. Due to labor shortages, poor working conditions in many parts of the world, and enduring consequences and fallout from the Covid-19 pandemic, manufacturing and distribution have both experienced massive delays and complications. This, in turn, has kicked the growth rate of inflation into an entirely new gear, meaning that the costs necessary to acquire these types of services are growing by the month. Since beginner ecommerce merchants are often operating with fairly modest profit margins until they begin to scale, this can put an unneeded squeeze on your bottom line that can leave you feeling anxious, discouraged, and altogether stressed-out.

Even though these adverse conditions certainly won’t last forever, reassurance doesn’t exactly help you in the here and now. So how can you reduce supply distribution costs as much as possible in the meantime? Read on for a concise explanation of how to manage distribution and supply chain costs and wrangle them down to a more affordable level.

What is physical distribution**?**

The physical distribution definition is less complicated than you might think. Put simply, it refers to the delivery and shipment of goods from the manufacturing center, out to warehouses and distribution centers, and then eventually through delivery routes to the customer’s door. Meanwhile, supply chain management refers to the flow of goods and services, and refers to all steps in the process from the acquisition of raw materials to the final delivery. These terms are fairly similar, but do have slightly different definitions that it pays to be mindful of. Think of a square and a rectangle. Physical distribution services are a part of supply chain management distribution, but not all supply chain and distribution services are necessarily physical.

So how should I keep costs down?

Distribution supply chain management and transportation costs don’t have to break the bank. Here are a few key tips to help optimize the chain of distribution and prevent any unnecessary losses.

First, keep an eye out for any inefficiencies. Which payment processor do you currently use? Are their fees competitive, or are there perhaps better options? Even a percentage point or two adds up a lot over time. Check in with your warehousing partner and make sure that newly-arrived merchandise is being checked into inventory within a timely manner, as opposed to sitting around in intake for days on end.

Another tip is to streamline order processing. You should have one main piece of software handling the bulk of operations, which should have a robust capability to accept seamless integrations. This eliminates the need for you to go back and forth and manually input or approve transfers of information, saving you both time and money.

Third, make sure to monitor your progress! At the very least, take a few notes from month to month, to make sure that any changes you make are actually having a positive effect on your business and your bottom line. The utilization of demand forecasting can make or break your short to medium term progress, and the best way to predict the future is to have solid data about the past.

In conclusion

Distribution in supply chain management is typically a great cost for merchants, but it shouldn’t be prohibitive. By taking a few simple steps, you can cut down on unnecessary costs in your distribution chain. One more bonus step you can take, however, is registering a free account with P2Pseller. We allow warehousing and fulfillment partners to upload their storage space and warehousing services to our open, democratized market, making sure that you can get the best prices possible. All costs are delivered 100% up front, so there’s no need to worry about hidden fees. Sign up today with absolutely no commitment required on your end to see exactly what we can do for you and your business. We’ve got our eyes set on bringing about the ecommerce revolution. We’d love nothing more than to have you on board.


Tags

#supplychain#distribution#fulfillment#costcutting
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Oleg Mikhailenko

Co-Founder, CEO P2Pseller

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