Cost Containment At Managing The Supply Chain

1296 Words6 Pages
Jim Owens, the former chairman and CEO of construction-equipment maker Caterpillar once said “In our industry, the competitor that`s best at managing the supply chain is probably going to be the most successful competitor over time. It`s a condition of success”.
As companies try to gain acumen and growth, they are going to face various challenges irrespective of their industries and business verticals. The companies should do cost containment, carry out effective risk management, perform information sifting, create customer Intimacy and should tap globalization in their favor if they want to outperform and outlive their competitors.
Cost Containment:
Cost Containment is centric to business survival. The challenges to cost containment are rapid wage inflation in erstwhile low-cost markets, spikes in commodity prices and escalating fuel prices. Logistics costs are increasing since 2005 at an average rate of 7.96%. Centralizing the supply chain, transport management and development of internal logistics capabilities can be used to counteract Logistics cost.
Flexibility will create a supply chain that is resilient to cost volatility. For the optimal usage of resources, the supply chain should employ intelligent modelling capabilities. Cost structures should be variable and should be capable of catering to fluctuating market demand. Shared decision making with partners, outsourcing non-differentiating functions to share risks and scenario based operational analysis are some of
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