How Supply Chain Consultants Can Help Organisations Reduce Costs and Improve Working Capital

In today’s competitive business environment, managing costs and improving working capital are crucial for sustaining profitability and growth. One effective strategy is to leverage the expertise of supply chain consultants. These professionals specialise in optimising supply chain operations, offering solutions that reduce fixed and variable costs, minimise transport expenses, and enhance working capital positions. This article delves into how supply chain consultants can provide these benefits to organisations.

‍

Understanding Supply Chain Consulting

Supply chain consultants are experts in the design, implementation, and management of supply chains. They possess in-depth knowledge of logistics, procurement, production planning, inventory management, and transportation. Their primary goal is to identify inefficiencies and implement strategies that streamline operations, reduce costs, and improve overall performance.

Reducing Fixed Costs

Fixed costs are expenses that do not vary with production levels, such as rent, salaries, and insurance. Reducing fixed costs can significantly improve an organisation's profitability. Supply chain consultants employ various strategies to achieve this:

1. Optimising Facility Utilisation:
   • By analysing the utilisation of facilities, consultants can identify underused spaces and suggest consolidation or reconfiguration to maximise efficiency. This can lead to reduced rental costs and better allocation of resources.
2. Streamlining Processes:
   • Consultants review existing processes and identify areas where automation or process improvements can reduce labour costs. Implementing lean manufacturing principles, for example, can eliminate waste and enhance productivity.
3. Outsourcing Non-Core Activities:
   • Supply chain consultants can help organisations identify non-core activities that can be outsourced. This reduces the need for in-house staff and associated overheads, thereby lowering fixed costs.

Reducing Variable Costs

Variable costs fluctuate with production levels and include expenses such as raw materials, packaging, and utilities. Supply chain consultants focus on several key areas to reduce these costs:

1. Strategic Sourcing:
   • By conducting thorough market analysis, consultants can identify cost-effective suppliers and negotiate better terms. Strategic sourcing ensures that organisations get the best value for their money while maintaining quality.
2. Inventory Management:
   • Optimising inventory levels is crucial for reducing carrying costs. Consultants use advanced forecasting and inventory management techniques to ensure that organisations maintain optimal stock levels, minimising excess inventory and associated costs.
3. Improving Supplier Relationships:
   • Strong relationships with suppliers can lead to better pricing, payment terms, and service levels. Consultants facilitate collaboration between organisations and suppliers to foster mutually beneficial partnerships.
4. Energy Efficiency:
   • Implementing energy-efficient practices in production and warehousing can significantly reduce utility costs. Consultants identify opportunities for energy savings, such as upgrading equipment or optimising energy use.

Minimising Transport Costs

Transport costs can be a substantial portion of an organisation's expenses, especially for those involved in distribution and logistics. Supply chain consultants employ several strategies to minimise these costs:

1. Route Optimisation:
   • By analysing delivery routes, consultants can identify the most efficient paths, reducing fuel consumption and travel time. Advanced route optimisation software can also be utilised to plan optimal routes in real-time.
2. Consolidation of Shipments:
   • Combining smaller shipments into larger ones can reduce transport costs. Consultants help organisations identify opportunities for consolidation, whether it’s through full truckload shipments or groupage services.
3. Carrier Negotiation:
   • Consultants leverage their industry knowledge and relationships to negotiate better rates with carriers. This includes securing volume discounts, optimising freight classes, and ensuring competitive pricing.
4. Adopting Intermodal Transport:
   • Using a combination of transport modes, such as rail and truck, can be more cost-effective than relying solely on one mode. Consultants analyse the logistics network to determine the best mix of transport modes.

Improving Working Capital Positions

Working capital is the difference between current assets and current liabilities and is a key indicator of an organisation’s financial health. Improving working capital positions can enhance liquidity and provide greater flexibility for growth and investment. Supply chain consultants help improve working capital through various means:

1. Optimising Inventory Turnover:
   • High inventory turnover indicates efficient inventory management. Consultants implement strategies to increase turnover, such as just-in-time (JIT) inventory systems, reducing the capital tied up in stock.
2. Enhancing Accounts Receivable:
   • Faster collection of receivables improves cash flow. Consultants advise on credit policies, collection processes, and customer relationship management to ensure timely payments.
3. Extending Accounts Payable:
   • Delaying payments to suppliers without damaging relationships can improve cash flow. Consultants negotiate extended payment terms and implement efficient payables management systems.
4. Implementing Demand Forecasting:
   • Accurate demand forecasting reduces the risk of overproduction and excess inventory. Consultants use advanced analytical tools to predict demand, aligning production and inventory levels with market needs.

Case Studies and Real-World Applications

Case Study 1: Retail Chain Optimises Inventory Management

A major Australian retail chain faced challenges with high inventory carrying costs and stockouts. Supply chain consultants conducted a thorough analysis of their inventory management practices and implemented a demand forecasting system combined with a just-in-time (JIT) inventory approach. This led to a 20% reduction in inventory carrying costs and a 15% decrease in stockouts, significantly improving their working capital position.

Case Study 2: Manufacturing Firm Reduces Transport Costs

An Australian manufacturing firm struggled with high transport costs due to inefficient route planning and underutilised shipment capacity. Supply chain consultants introduced route optimisation software and identified opportunities for shipment consolidation. As a result, the firm saw a 25% reduction in transport costs and improved delivery times, enhancing customer satisfaction.

Case Study 3: Pharmaceutical Company Enhances Supplier Relationships

A pharmaceutical company faced variable cost challenges due to volatile raw material prices. Supply chain consultants helped the company develop strategic sourcing practices and fostered stronger relationships with suppliers. By negotiating long-term contracts and better payment terms, the company achieved a 10% reduction in raw material costs and improved supply chain stability.

The Role of Technology in Supply Chain Optimisation

Technology plays a critical role in modern supply chain management. Supply chain consultants leverage various technologies to achieve cost reductions and improve working capital:

1. Supply Chain Management Software:
   • Comprehensive software solutions provide visibility across the entire supply chain, enabling better decision-making and coordination. Features include inventory management, order processing, and supplier collaboration tools.
2. Data Analytics and Business Intelligence:
   • Advanced analytics help organisations make data-driven decisions. Consultants use analytics to identify trends, forecast demand, and optimise operations.
3. Automation and Robotics:
   • Automation reduces labour costs and increases efficiency. Consultants identify opportunities for automation in warehousing, production, and distribution.
4. Internet of Things (IoT):
   • IoT devices provide real-time data on asset tracking, inventory levels, and equipment performance. Consultants use this data to enhance supply chain visibility and efficiency.
5. Blockchain Technology:
   • Blockchain enhances transparency and security in supply chains. It can be used for tracking the provenance of goods, verifying transactions, and reducing fraud.

Benefits of Engaging Supply Chain Consultants

Engaging supply chain consultants offers several benefits beyond cost reduction and working capital improvement:

1. Expertise and Experience:
   • Consultants bring a wealth of knowledge and experience across various industries. They understand best practices and emerging trends, providing valuable insights.
2. Objective Perspective:
   • As external parties, consultants offer an unbiased view of an organisation’s operations. This objectivity helps in identifying issues that internal teams might overlook.
3. Tailored Solutions:
   • Consultants develop customised strategies based on the specific needs and goals of the organisation. This ensures that the solutions are practical and effective.
4. Implementation Support:
   • Beyond providing recommendations, consultants assist with implementing changes. This includes training staff, configuring systems, and monitoring progress.
5. Continuous Improvement:
   • Supply chain consultants focus on continuous improvement. They establish key performance indicators (KPIs) and regularly review performance to ensure sustained benefits.

Choosing the Right Supply Chain Consultant

Selecting the right supply chain consultant is crucial for achieving desired outcomes. Organisations should consider the following factors:

1. Industry Experience:
   • Look for consultants with experience in your specific industry. This ensures they understand the unique challenges and requirements of your sector.
2. Proven Track Record:
   • Review case studies and client testimonials to gauge the consultant’s success in delivering results. A proven track record indicates reliability and effectiveness.
3. Comprehensive Services:
   • Choose consultants who offer a broad range of services, from strategy development to implementation support. This ensures a holistic approach to supply chain optimisation.
4. Technology Capabilities:
   • Ensure the consultant is proficient in the latest technologies and tools. This is essential for leveraging technology to achieve supply chain improvements.
5. Collaborative Approach:
   • Effective supply chain optimisation requires collaboration. Select consultants who are willing to work closely with your team and foster a collaborative environment.

In an increasingly complex and competitive business landscape, managing supply chain costs and improving working capital positions are vital for organisational success. Supply chain consultants provide the expertise, strategies, and technological know-how to achieve these goals. By optimising fixed and variable costs, minimising transport expenses, and enhancing working capital, supply chain consultants can significantly contribute to an organisation’s profitability and growth. Engaging the right consultant ensures tailored solutions and sustained improvements, making them an invaluable asset for any business aiming to excel in their industry.

‍

The Critical Role of Back-of-House (BOH) Operations in Hospital Master Planning

Why BOH Operations Matter in Hospital Development

Hospital master planning is a complex undertaking that shapes the functionality, safety, and efficiency of a healthcare facility for decades to come. While much attention is given to clinical spaces, patient experience, and aesthetics, one critical yet often overlooked aspect is back-of-house (BOH) operations.

BOH areas—loading docks, supply chain logistics, waste management, food service, linen handling, and sterile processing—are the lifeblood of hospital operations. Poor planning can lead to safety risks, inefficiencies, traffic congestion, compliance failures, and escalating costs to serve.

This is particularly critical in the Asia-Pacific (APAC) region, where rapid urbanisation, population growth, and ageing demographics are driving demand for efficient, scalable, and cost-effective healthcare facilities.

This article explores why BOH operations must be prioritised in hospital master planning to mitigate risks and optimise performance.

1. BOH Infrastructure & Traffic Management: Mitigating Safety & Congestion Risks

The Challenge: Overcrowded Loading Docks & BOH Corridors

Many hospitals in densely populated APAC cities face severe congestion in their BOH areas due to:
❌ High delivery volumes from multiple suppliers
❌ Poorly designed loading docks that create bottlenecks
❌ Limited space for goods movement
❌ Inadequate separation of hospital staff, suppliers, and patients

Without careful planning, these issues lead to:
⚠ Traffic congestion → Delayed deliveries & increased logistics costs
⚠ Worker & patient safety hazards → Risk of accidents in loading dock areas
⚠ Service inefficiencies → Staff spending more time managing deliveries instead of patient care

The Solution: Smart BOH Design & Traffic Flow Optimisation

Hospitals can proactively mitigate these risks through:

✔ Optimised loading dock layouts → Dedicated zones for deliveries, waste removal & linen services
✔ Vehicle scheduling & dock appointment systems → Reduces congestion & waiting times
✔ Separation of BOH & patient flow → Avoids cross-contamination & ensures HACCP compliance
✔ Use of Automated Guided Vehicles (AGVs) → Minimises manual handling & enhances safety

Strategic BOH master planning ensures that logistics and clinical operations are seamlessly integrated, reducing traffic risks, service disruptions, and operational costs.

2. Cost-to-Serve & Operational Efficiency: The Hidden ROI of BOH Planning

The Challenge: Uncontrolled Operating Costs Due to Poor BOH Design

If BOH operations are not considered early, hospitals face higher long-term costs from:
❌ Inefficient workflows → Increased manual labour & staff fatigue
❌ Excessive stockholding & poor inventory management → Inflated working capital costs
❌ Poor layout of central stores → Inefficient picking & replenishment
❌ High transport & distribution costs → Due to suboptimal supply chain networks

The Solution: Integrated BOH & Supply Chain Design

✔ Centralised inventory hubs & demand-driven replenishment → Reduces waste & storage costs
✔ Dock-to-ward optimisation strategies → Direct line replenishment minimises stock-outs
✔ Automated storage & retrieval systems (ASRS) → Improves accuracy & labour efficiency
✔ Demand forecasting & AI-driven inventory models → Reduces carrying costs while ensuring supply availability

When hospitals design BOH operations with a supply chain mindset, they unlock significant savings in labour, inventory, logistics, and utilities, making long-term operations more financially sustainable.

3. Food & Linen Services: HACCP & Compliance Considerations

The Challenge: Food Safety & Linen Handling Risks in Hospital BOH Areas

Hospital food & linen services present serious risks if BOH workflows are not carefully managed:
⚠ Cross-contamination risks → Poor segregation of clean & dirty zones
⚠ HACCP non-compliance → Leading to regulatory penalties & foodborne illness risks
⚠ Delivery bottlenecks → Late meal & linen replenishments impacting patient care

The Solution: BOH Design for Safe & Compliant Service Delivery

Hospitals must adopt purpose-built BOH spaces with:

✔ Separate entry & exit zones for food, linen, and waste flows
✔ Temperature-controlled food storage & distribution areas
✔ Barrier workflows & segregated waste handling for infection control
✔ Digital traceability & HACCP-compliant food monitoring systems

By designing BOH with compliance at the core, hospitals avoid safety risks, regulatory issues, and costly operational inefficiencies.

4. Waste Management & Sustainability: Future-Proofing BOH for Green Hospitals

The Challenge: Rising Waste Volumes & Sustainability Pressures

Hospitals generate enormous waste streams, including:
🗑 Clinical & biohazard waste → Requires strict disposal protocols
♻ Recyclable & general waste → Growing regulatory pressure for sustainability
🍽 Food & organic waste → Needs proper composting & disposal

Poor BOH waste handling leads to:
❌ Environmental & regulatory compliance risks
❌ Odour, hygiene & pest control challenges
❌ High disposal costs & inefficiencies

The Solution: Sustainable BOH Waste Management

✔ Automated waste chutes & pneumatic waste disposal → Reduces contamination risks
✔ Recycling & circular waste economy → Reduces landfill impact
✔ On-site food waste digesters & composting → Sustainable F&B operations
✔ Green building certifications → Aligns with APAC healthcare sustainability goals

Hospitals that integrate sustainable BOH waste systems achieve lower costs, better hygiene, and regulatory compliance while improving their environmental footprint.

BOH Master Planning—A Critical Success Factor for APAC Hospital Developments

As APAC’s healthcare infrastructure expands, hospital developments must prioritise BOH operations in the Master Planning phase to:

✅ Avoid congestion, traffic & safety risks → Through smart loading dock & logistics design
✅ Optimise cost-to-serve & service efficiency → By integrating BOH & supply chain strategies
✅ Ensure HACCP compliance & safe food/linen services → Through workflow segregation & monitoring
✅ Implement sustainable waste management → To align with green hospital standards

Neglecting BOH operations in master planning creates long-term operational challenges that are costly, inefficient, and difficult to fix post-construction.

Is your hospital project designing for BOH success? By engaging supply chain and healthcare logistics specialists early, APAC hospital developments can achieve safer, more efficient, and future-proof healthcare infrastructure.

‍

Boutique Supply Chain Consulting Firm Trace ranked Gold-tier only 2 years from inception.

‍

‍"We are proud to be recognised as an ANZ Gold ranked consultancy in Supply Chain just two years after starting. This puts us alongside some of the industry's largest players.

I'm incredibly proud of our team for their hard work and commitment to excellence, which has earned us this recognition and solidified our reputation as a trusted advisor. We look forward to another year of delivering practical and tangible results for our clients, especially during times of intense cost pressure. As an Australian-owned, specialised boutique firm, we prioritise our clients in a changing consulting market.

On behalf of the trace. team, thank you to our wonderful business network, families and friends."

‍

Shanaka Jayasinghe, Partner.

‍