Your international supplier announces that it has reduced its margin as much as possible: what new savings levers are there?

For a landlocked country like Niger, the transport post often constitutes 30% to 90% of the cost of the goods (case of imported iodized salt). Knowing and controlling all the costs that occur during the delivery of goods to Niamey (Freight, insurance, financial cost of immobilization during transport, percentage of damage during transport, customs duties, port fees and taxes), allows you to make a relevant choice of transport mode and port taxes), allows you to make a relevant choice of transport mode, take into account the various service providers, negotiate volume prices and contract the service.

In such a case, it can be considered that a further decrease in prices could put you and your supplier in trouble by a domino effect. However, that doesn't mean your cost-cutting efforts have to stop.
Here are three ways to reduce supply chain costs without pushing your suppliers out of the business...

1. Eliminate duplicates in the supply chain.

First, you need to create an organization chart of all activities and partners in the supply chain. You will therefore need to study in detail how the various services work: the production, inspection, storage, and transport of all the materials and components that go into the final product. You will probably find activities that are repeated by the various partners in the supply chain (for example: control at the end of the chain by one of the service providers immediately followed by an entry inspection by another service provider). If you can work with your providers to eliminate these “duplicates”, you can reduce their costs, and therefore your price.

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2. Assign more tasks to the most effective provider.

Sometimes, the skills of providers overlap. For example, let's take the purchase of machined plates by a customer. The customer's immediate supplier can do the cutting and machining. This supplier's subcontractor can do the design, design, cutting and machining. In this case, who should do the machining? Assuming that it can deliver the highest quality, the most effective partner in the supply chain should also deliver, service and maintenance. All this assumes that you are in a position to challenge the activity, and to overcome the resistance to change.

3. Leverage the purchasing power of the supply chain.

Often, products and services purchased by second-tier suppliers are also purchased by a first-tier supplier. In many cases, the first-tier supplier gets a better price than the second-tier suppliers. In such cases, the first-tier supplier may negotiate to add

the volumes of second-tier suppliers in its agreements, thus obtaining even greater discounts for itself and reducing the total cost throughout the supply chain (for example in the small appliance industry, electric motors are negotiated in volume for all subcontractors who assemble the finished products.)