108810 Resource 94086 93210 93210 1133264260059 1145851557110 Controlled China Logistics Cost Reductions

China Logistics Managers Pressed to Continue to Reduce Costs While Maintaining Service Levels

A speaker from CHaINA Summit today discussed his experience with reducing logistics costs at his company which sells to the retail business in China. The company has experienced a reduction in logistics costs by doing some of the following: <br /><br /><ol><li>Reduction in warehouses - inventories have&nbsp; decreased which has a direct impact on logistics costs. </li><li>More direct flows from factories to customers </li><li>Much less multiple handling, thus less damages </li><li>Consolidating product in fewer locations </li><li>Reducing the number of 3pls </li></ol><br />However, due to the large increase in fuel prices, the foreign 3pls were forced to raise their prices the following year. In response, the company's top management decided to cut the relationships with those 3pls and instead work with 25 local warehousing and trucking companies in China. Naturally, this approach takes a rather short-cited view of only cost factors. Yet, the speaker was still able to avoid an increase in logistics costs and they maintained a sufficient level of service to satisfy their customers in China. <br /><br />Other recommendations to reduced costs offered:<br /><br /><ul><li>Keep simple warehouses that you can shut down easily.&nbsp;<br /> </li><li>Look at cost to serve - Have distributors do logistics for you. <br /></li><li>Create cost docking platforms. This is difficult to justify if your volumes are not high.</li></ul>The reduction of logistics costs can only be carried out to a point, beyond which you experience diminishing returns and merly a pushing of costs from one place to another. Supply chain costs are no longer a resevoir of continuous savings potentials. As was reflected throughout the day today, companies are looking for other more creative ways to manage their supply chains in China and globally, such as by investigating the introduction of&nbsp; demand china management practices.&nbsp; This will be an exiting new frontier in supply chain managment. <br /> 10 application/xml false china demand chain china distribution china sourcing china supply chain demand chain management global supply chain Mozilla/5.0 (Windows; U; Windows NT 5.1; en-US; rv:1.8.0.2) Gecko/20060308 Firefox/1.5.0.2 222.68.75.227 222.68.75.227 dustinmattison false true false false true 187565 false false true false false false true 94086 blog blogsite/ChinaSupplyChain/web