Supply Chain Survival: Balancing Cost with Service During Economic Downturns

When the economy is in a tailspin, cutting costs is the name of the game. But while supply chain managers’ first instincts during an economic downturn might be to cut fast and cut deep, maintaining a high level of service during these periods is critical.

Remember, customers are likely also looking for ways to cut costs—and if a company they rely on is suddenly marred by late deliveries, poor communication, and other service issues, they may decide to take their business elsewhere. Retaining high-value customers is essential if shippers want to survive a downturn and maintain a strong reputation. If service slips and customers abandon ship, negative word of mouth may hinder any attempts to replace them.

Balancing cost-cutting efforts with a desire to maintain superior service can seem like an impossible task. Some tradeoffs are certainly necessary, but it is possible to trim the fat without damaging the overall customer experience. Here are some initial steps supply chain managers might consider.

Tap into a larger pool of carriers

When a shipper is only utilizing a small handful of carriers, finding lower rates can be a challenge. But calling a dozen carriers for rates on each and every shipment is simply not a good use of employees’ time.

By taking full advantage of a transportation management system (TMS), shippers can put their freight in front of more carriers, allowing them to source and select the very best rates. It’s important to note that this will not necessarily be the lowest rate. By leveraging a TMS, supply chain managers and their teams can easily evaluate carriers to ensure an attractively low rate doesn’t come at the expense of reliability—allowing them to select an option that suits their reduced budget without risking a poor experience for the customer.

Adopt more flexible solutions

When shippers are looking for ways to bring costs down, making expensive, long-term investments like hiring more staff tends to be off the table—even if those investments could result in a more efficient, effective supply chain and happier customers.

Thankfully, it doesn’t have to be all or nothing. By leveraging flexible solutions like outsourced logistics management services, shippers can enjoy the benefits of the investments they want to make, often at a much lower cost. Service won’t slip because supply chain experts are at the helm, and companies’ in-house teams can shift their energy away from day-to-day management and toward more strategic tasks that drive recovery. Since these solutions can be scaled up or down as needed and stopped at any time, shippers can consistently reevaluate and recalibrate as their circumstances change.

This kind of flexibility is highly valuable during economic downturns where a companies’ financial outlook and customer demand may constantly be in flux. But in our experience working with shippers during previous recessions, these solutions can prove so convenient and cost-effective that companies often continue using them long after the economy has recovered and the danger has passed.

Helping supply chains to survive and thrive

At CTSI-Global, we’ve been in the logistics game for more than 60 years, so we’ve seen what works—and what doesn’t—during economic downturns. We’re here to help you not only weather the storm but come out stronger on the other side.

Our proprietary, industry-leading TMS is designed to help shippers reduce their costs and boost efficiency the smart way, all while gaining more tools that support a better customer experience, like in-transit tracking capabilities. And if you need an extra pair of hands (or several), our expert logistics management services are available as a complete package or as customizable bundles, so you only pay for what you need.

Ensure your supply chain is set up to survive and thrive. Contact us today.