Logistics and Supply Chain Management, 6th Edition

Reducing costs through collaborative working

Most businesses are constantly seeking to reduce costs but in many cases these cost-reduction exercises mainly focus on gaining internal efficiencies. However one of the biggest opportunities for cost reduction is not within the business but rather it lies at the interfaces with other partners in the supply chain. The rationale behind this assertion is that for most of their existence firms have focused on seeking internal efficiency improvements and have often failed to recognise the significant layer of cost that exists at supply chain interfaces – a cost that is there because those interfaces have not been well managed in the past.

It has often been the case that relationships with suppliers, and ...