How To Improve Supply Chain Efficiency (And Cut Costs Without Breaking the Business)

Danyul Gleeson
11 minutes ago
6 min read

Let’s clear something up.

Supply chain efficiency isn’t a “nice-to-have operational upgrade”.It’s the difference between a business that scales cleanly and one that spends every Monday explaining why margins mysteriously evaporated over the weekend.

When supply chains are efficient, money moves smoothly.

When they’re not, cash gets trapped in warehouses, freight invoices grow teeth, and customers quietly stop reordering.

This isn’t theory. It’s physics. And gravity always wins.

So let’s talk about how to actually improve supply chain efficiency and reduce costs without blowing up service, teams, or your sanity.

How To Improve Supply Chain Efficiency (And Cut Costs Without Breaking the Business)

What Supply Chain Efficiency Really Means (No Buzzwords Allowed)

Supply chain efficiency is the ability to move goods from supplier to customer using the least time, effort, and money possible, without turning delivery into a lottery.

Efficient supply chains do three things well:

They flow predictably
They surface problems early
They spend money on purpose

When efficiency improves, businesses usually see:

Lower cost per order
Fewer stockouts and overstocks
More reliable delivery promises

According to McKinsey, companies that actively optimise supply chains can reduce operational costs by 10–20%, while simultaneously improving service levels. That’s not trimming fat. That’s structural advantage.

Source: McKinsey & Company – Supply Chain 4.0

Why Most Supply Chains Feel “Busy” But Stay Inefficient

Here’s the uncomfortable truth.

Most supply chains aren’t inefficient because people are lazy.They’re inefficient because decisions are made late, blind, or in isolation.

Common symptoms:

Inventory planned without transport cost visibility
Freight booked without understanding downstream warehouse congestion
Forecasts updated monthly while demand moves daily
Tech that reports yesterday’s mess beautifully, but fixes nothing

Efficiency comes from connected decisions, not heroic firefighting.

How Technology Actually Improves Supply Chain Efficiency (When Used Properly)

Technology doesn’t save money by existing.It saves money when it changes behaviour.

Warehouse Management Systems (WMS)

A solid WMS improves:

Inventory accuracy
Pick paths and slotting
Labour productivity

Operators using WMS properly often reduce picking errors by 30–50% and cut labour cost per order meaningfully.

Source: Gartner – Warehouse Management Systems Market Guide

Transport Management Systems (TMS)

TMS platforms optimise:

Carrier selection
Routing
Freight audit and recovery

Industry studies show transport cost reductions of 5–15% when TMS is paired with route optimisation and carrier benchmarking.

Source: ARC Advisory Group – Transportation Management Systems Overview

AI, Analytics, and Real-Time Visibility

This is where efficiency stops being reactive.

AI-driven demand planning reduces forecast error by up to 50%
Real-time shipment tracking cuts exception management costs and customer service tickets
Lane-level analytics expose margin-destroying routes hiding in plain sight

Source: Deloitte – AI in Supply Chain Planning

Transport Works take:Tech isn’t the differentiator anymore. Decision speed is. If your dashboards don’t change what happens tomorrow morning, they’re expensive wallpaper.

Inventory Optimisation: Where Cash Goes to Hide (Or Gets Set Free)

Inventory is money that stopped moving and decided to live on a shelf.

The fastest cost wins often come from inventory policies, not transport renegotiation.

Forecasting That Doesn’t Rely on Vibes

Efficient businesses:

Forecast at SKU and location level
Adjust for seasonality and promotions
Set safety stock based on variability, not hope

Better planning reduces both excess stock and stockouts. That’s not magic. It’s maths.

Source: Harvard Business Review – Demand Forecasting and Inventory Performance

Inventory Accuracy Changes Everything

Inventory accuracy above 99% dramatically reduces:

Emergency freight
Customer cancellations
Overselling penalties

RFID and barcode scanning routinely lift accuracy from the low 90s into the high 99s.

Source: GS1 – Barcode and RFID Impact Studies

What Supply Chain Optimisation Actually Is (And Why It Cuts Costs Fast)

Supply chain optimisation means designing your network around how customers actually buy, not how it grew historically.

Core Optimisation Levers

Network designHow many warehouses? Where? Serving which regions?
Route and mode optimisationRoad vs parcel vs postal vs linehaul vs air
Process simplificationFewer handoffs. Fewer exceptions. Less rework.

When companies optimise across all three together, logistics cost reductions of 10–20% are common.

Source: BCG – End-to-End Supply Chain Optimisation

Supplier and Carrier Collaboration: Efficiency Loves Fewer Surprises

Treating suppliers and carriers like vending machines guarantees volatility.

Efficient operators:

Run scorecards on on-time delivery and variability
Share forecasts, not just POs
Co-design packaging, consolidation, and routing changes

Integrated planning reduces expedite costs and improves landed cost stability.

Source: MIT Center for Transportation & Logistics

The Human Factor (Because Systems Don’t Pick Orders)

Even the best tech collapses without trained humans.

Companies that invest in training and continuous improvement:

Reduce picking errors
Improve throughput
Sustain gains over time instead of slipping back

Source: PwC – Workforce Transformation in Supply Chains

Efficiency isn’t about perfect execution. It’s about learning faster than problems repeat.

How Supply Chain Efficiency Reduces Costs (Without Killing Service)

Here’s where the money actually goes missing and how efficiency brings it back.

Transport: fewer emergency shipments, better carrier mix
Inventory: lower carrying cost, less obsolescence
Warehousing: fewer labour hours per order
Customer service: fewer “where’s my order” tickets

Retailers using dynamic optimisation report double-digit reductions in markdowns and premium freight.

Source: Accenture – Supply Chain Cost Optimisation

Sustainability: The Side Effect of Running Things Properly

Efficient supply chains:

Drive fewer kilometres
Fill trucks better
Waste less packaging
Consume less energy

Lower emissions and lower cost often arrive together.

Source: World Economic Forum – Supply Chains and Sustainability.

Close-up view of a computer screen displaying supply chain analytics dashboard — Supply chain analytics dashboard on computer screen

Strategy vs Impact Snapshot

Strategy	What Actually Improves
WMS + TMS	Accuracy, labour cost, delivery reliability
Route optimisation	Freight spend, fuel, emissions
Inventory optimisation	Cash flow, service levels
Supplier collaboration	Stability, predictability
Workforce training	Sustained gains

Efficiency doesn’t come from one lever. It comes from stacking them.

Practical First Steps (No Overhauls Required)

Start small. Stay focused.

Map your current flows
Measure cost per order and on-time delivery
Identify the ugliest bottlenecks
Fix one lever at a time
Review monthly, not annually

For many businesses, working with a 4PL or supply chain partner accelerates this by years and avoids expensive trial-and-error.

FAQs: Improving Supply Chain Efficiency and Reducing Costs

What does supply chain efficiency mean in practical terms?

Supply chain efficiency means moving goods from supplier to customer using the least possible time, cost, and effortwhile still hitting delivery promises. In practice, it shows up as lower cost per order, higher inventory accuracy, fewer emergency shipments, and more predictable delivery performance across regions like NZ, Australia, and the USA.

How can businesses reduce supply chain costs without hurting service?

The most effective way to reduce supply chain costs without damaging service is to optimise transport, inventory, and processes together, not in isolation. Businesses typically cut costs by improving demand forecasting, right-sizing safety stock, optimising carrier mix and routes, and using WMS/TMS systems to reduce errors and manual work rather than cutting service levels.

What technology improves supply chain efficiency the most?

The technologies with the biggest impact on supply chain efficiency are Warehouse Management Systems (WMS), Transport Management Systems (TMS), and advanced analytics or AI forecasting tools. When integrated, these systems improve inventory accuracy, route optimisation, and decision speed, often reducing logistics costs by 10–20% while improving on-time delivery.

What are the most common causes of supply chain inefficiency?

The most common causes of supply chain inefficiency are poor inventory visibility, siloed planning between teams, manual processes, unreliable forecasting, and lack of real-time data. These issues lead to excess stock, stockouts, emergency freight, and inconsistent customer experiences, all of which inflate cost and reduce margin.

How do companies measure supply chain efficiency?

Companies measure supply chain efficiency using KPIs such as cost per order, on-time delivery rate, inventory accuracy, inventory turnover, order cycle time, and perfect order rate. Tracking these metrics by region, channel, or product group helps identify where cost and service issues are coming from.

Can small and mid-sized businesses improve supply chain efficiency?

Yes. Small and mid-sized businesses can significantly improve supply chain efficiency by using cloud-based inventory and transport tools, simplifying processes, focusing on a small set of core KPIs, and partnering with logistics providers that offer optimisation and visibility rather than just freight capacity.

How long does it take to see cost savings from supply chain optimisation?

Many businesses see measurable cost savings from supply chain optimisation within 3–6 months, particularly from improved inventory policies, better carrier selection, and reduced emergency freight. Larger network redesign projects may take longer but typically deliver more durable, structural savings.

Final Thought (Because Someone Has to Say It)

Efficient supply chains don’t feel heroic.

They feel boring.

Predictable.

Calm.

And that calm is exactly where profit hides.

If your supply chain feels permanently loud, expensive, and reactive, that’s not “the cost of doing business”. That’s a design problem.

And design problems are fixable.

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Insights from Danyul Gleeson, Founder & Logistics Chaos Tamer-in-Chief at Transport Works

Danyul has been in the trenches - warehouses where pick paths were sketched on pizza boxes and boardrooms where the “supply chain strategy” was a shrug. He built Transport Works to flip that script: a 4PL that turns broken systems into competitive advantage. His mission? Always Delivering - without the chaos.