Supply Chain Cost Reduction -- Approach With Aggression, Intelligence

Cutting across the board leads to decline, not rise, in profitability, expert says

Chicago, IL, January 12, 2009 -- All businesses are being asked to cut costs in this economic crisis, but the tendency to use scissors instead of a scalpel will not increase profitability. An aggressive, yet intelligent, approach to supply chain cost reduction is the best way to survive and emerge even stronger once conditions improve.

"Cut, cut, cut is simply not a successful strategy," Jim Tompkins, President and CEO of Tompkins Associates, said at the press conference today at ProMat, the world's leading material handling and logistics event. "I see companies today making cuts across the board without understanding where their real profitability lies, and this inevitably leads to stagnation and declining profits."

Slashing supply chain elements and personnel in the area of material handling and logistics, for example, typically ends up costing organizations more than they save. After all, it takes talented staff and resources to help bring about future savings and add value, even in an economic downturn.

Tompkins advises companies to think of cost reduction in the "Buy-Make-Move-Store-Sell" framework. "Cutting costs while boosting profits (click here for the article, 'The Riddle of Supply Chain Cost Reduction') that everyone is trying to solve today," he said. "It is not about cutting 10% across the board -- it is about breaking costs down into meaningful categories and analyzing them to ensure that you are not slashing certain valuable areas just for the sake of needing to cut, cut, cut!"

To learn what some of the world's top companies are doing now to reduce costs, take a look at this guide.

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About Tompkins Associates
Tompkins Associates designs and integrates global end-to-end solutions for companies that embrace supply chain excellence. For more than 30 years, Tompkins has evolved with the marketplace to become the leading provider of global supply chain services, distribution operations consulting, technology implementation, material handling integration, and benchmarking and best practices. The company is headquartered in Raleigh, NC. Subscribe to the site feed for instant updates