Do you know that supply chain disruptions can impact profit margins in an organisation?
Building resilience against disruptions takes time and there are several (faster) ways to protect and increase your profit margins.
Since logistics costs will continue to climb and it is affecting your bottom line, have you considered reducing your logistics operating costs? Automation is your best friend when it comes to reducing operating costs. Use this calculator to find out how a logistics software can help with this and what is the expected ROI from it.
Here are the three things you can do to increase your profit margins:
This is pretty straightforward – the more you sell, the larger margins you gain. Look into how you could mobilise your existing workforce and diversify revenue streams to drive more sales.
Increase goods and service price
With the price hike in raw materials, doing this may retain your current profit margins. However, it may put you at a disadvantage when comparing price points with your competitors.
Reduce operating costs
Now this is when it gets interesting. A modest reduction in operating cost is actually equivalent to a significant increase in sales volume. If you were to reduce operating costs by 5%, you can achieve a 20% increase in profitability. Cost reduction is often more effective than pushing for sales.