Cost Reduction to Maximize Profits: RivusBy Jorge Ramos Zwanziger | Thu, 04/22/2021 - 16:25
Supply chains have become even more competitive but companies must adapt and understand how to reduce costs to thrive, said Andrés Birlain, CEO and Director of Strategic Partners at Rivus, to T21. “Logistics might seem like just an operation but it becomes a great opportunity for operational optimization … Today, (companies) could find an opportunity to maximize their profitability by addressing cost reduction,” Birlain told T21. Rivus specializes in cost reduction throughout a company’s entire supply chain and has created over 1,000 different solutions to maximize profits by optimizing costs.
Logistics costs are varied. While on average 72.1 percent of all costs come from transport and inventory, explains Edesk, smaller companies spend the most in distribution. "It becomes an issue of how to be more profitable. I no longer have to think about raising prices indefinitely but dedicate myself to controlling my costs," said Rodrigo Birlain, Sales Director of Rivus, to T21.
According to Fleet Transport, 30 percent of all costs for commercial businesses and 10 percent of all costs for industrial companies are related to logistics processes. In 2019, the average cost of logistics represented 11 percent of revenue, explains Edesk. With the rise of e-commerce in 2020 due to the COVID-19 pandemic, customer expectations have also risen, which is good for consumers and firms but hard on the logistics industry, explains PwC’s Future of the Logistics Industry report. “Supply chains were forced into survival mode as our normal cornerstones like efficiency, optimization and sustainability were not always an option. As businesses adapt post-pandemic, success will come to those that identify and implement cost, service and growth control up and down their supply chain,” said Mike Glover, Vice President of E-commerce Fulfillment at LEGACY Supply Chain, according to Inbound Logistics.
PwC mentions that companies can reduce costs by taking advantage of technology to create tools that increase efficiency, including:
Physical internet, which improves environmental sustainability and creates more transparent supply chains
IT standards that enable horizontal collaboration while making more efficient processes
Data analytics to improve customer experience and operational efficiency
Cloud to enable new platform-based business models
Blockchain, which enhances supply chain security by decreasing the risk of fraud and reduces the chance of bottlenecks and errors
Robotics and automation to reduce the human workforce and increase efficiency