February 13, 2024

Five Ways of Optimizing Supply Chain Cost & Efficiency

Explore 5 strategies for optimizing supply chain cost and efficiency
Romain Fayolle

The supply chain market in 2019 was at USD 32 billion, but forecasts indicate it can double by 2030. This rapid growth highlights the need of companies globally for supply chain optimization as a driver of long-term company success. Companies must maintain optimum performance and productivity while controlling costs; all this is possible with supply chain optimization. 

Even though the current supply chain setup appears highly successful and efficient, companies should regularly review and update the strategies. This ensures that the strategies remain relevant and align with the company's goals. Increasing the efficiency of your supply chain should be an ongoing process that continuously pegs on the company's objectives and also plays a role in developing and maintaining strong customer relations.

Here, we look at 5 ways to streamline your supply chain operations and how to make them more cost-effective and efficient.

Five Ways of Optimizing Supply Chain Cost & efficiency

Running an efficient supply chain is a delicate balance between attaining high operational efficiency and lowering expenses. It is about doing more and better but with less. We will discuss five practical ways to achieve this balance:

  1. Advanced Analytics and AI Data-Driven Decisions

Implementing advanced analytics capabilities lets you make sense of big data sets for much better decision-making. It can help identify inefficiencies in different parts of the supply chain, like logistics, optimizing stock levels, and analyzing demand patterns.

Companies can automate and optimize routine supply chain tasks with AI-driven tools, boosting accuracy and lowering manual effort and errors. Gartner reports that 31% of people already use AI to automate decisions, and 34% use AI to augment decision-making. In the next two years, the percentage of respondents planning to utilize AI for these purposes increases significantly. 76% intend to use it for decision automation, and 78% for decision augmentation.

  1. Strengthening Strategic Partnerships

Develop solid long-term relationships with suppliers and treat them as partners. Such relations lead to better quality, more dependable supply chains, and better cost negotiation opportunities. Numerous successful collaborations in supply chain management (SCM) are there as examples of strategic partnerships. Here are some notable ones:

  • Apple and Foxconn: Apple works closely with Foxconn, a prominent electronics manufacturing service provider. Through this partnership, Apple taps into Foxconn's manufacturing prowess and SCM expertise, enabling superior products at reduced costs.
  • Walmart and Procter & Gamble: Walmart has formed a strategic alliance with P&G, an FMCG giant. This collaboration grants Walmart access to P&G's innovative product development and SCM capabilities and excellent distribution network for P&G, enabling both companies to deliver a broad spectrum of quality products at competitive prices.

  1. Adopting Lean & Just-in-Time (JIT) Approach

With the JIT approach, suppliers collaborate as supply chain partners to provide materials right when they are needed. As a result, little or no inventory is built up in the system, reducing inventory costs and waste considerably. But to achieve this, the supplier partnership must be strengthened for the long-term relationship and mutual trust. JIT is a critical element of the Toyota Production System (TPS), which is famous globally for its optimizations and efficiencies.

  1. Sustainable Practices

Regulatory bodies worldwide are getting strict on single-use packaging. They are also placing more responsibility on the producers, focusing on Scope 3 emissions. Europe is at the forefront, but similar laws are emerging in Asia-Pacific and the US.

Implementing sustainable practices in your supply chain is good for the environment and can save costs. For instance, reducing packaging or switching to logistics with lower emissions can be cost-effective in the long run. Global companies are stepping up with ambitious sustainability initiatives.

Packaging, a significant portion of global spending, is a crucial focus of these sustainability efforts. Research indicates that companies are targeting better recyclability and increasing recycled content (60% of commitments), reducing plastic use (26%), and fostering innovation to change packaging practices (14%).

  1. Resilience & Continuous Improvement

Resilience and agility are crucial for a productive supply chain. This means being ready to respond to changing market conditions. 93% of supply chain leaders agree on enhancing their supply chain resilience. Their strategies include adopting dual sourcing for raw materials, boosting inventories of essential products, and, to a lesser degree, moving towards near-shoring their supply chains. It is about developing a supply chain that is proactive and capable of scaling operations effectively, whether that means boosting output to meet an unexpected rise in demand or even lowering output during much more stagnant periods.


Companies can ensure that their supply chains remain competitive and stay in tune with both present and future requirements by stimulating a culture of flexibility and innovation. It's also a strategic approach to change and innovation. It allows companies to flourish in a period of change.

Optimizing Efficiency with Holocene

Optimizing the supply chain's cost and effectiveness is an ongoing and dynamic process. It requires leadership's willingness to change, the right technology, and sharp execution.

Holocene is the ideal partner to enhance your supply chain operations and make your supply chain more effective. Holocene's solutions are created to improve cost-effectiveness and efficiency as your supply chain transitions from advanced analytics and AI to continuous improvement and sustainability.

Contact Holocene right now to help transform your supply chain into a lean, cost-effective, agile asset.