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The key to running a profitable pallet manufacturing company is efficiency. Keep Total Cost of Business (TCOB) as low as possible, and you can reap the profit margins necessary to maintain and grow your business. This requires implementing meticulous strategies for managing your costs so that you can keep more of the earnings you generate and apply them to produce even greater returns.
Suppose you’re ready to stop pouring money down the drain and make your pallet manufacturing business sustainable for growth. In that case, you need the right cost management strategies for pallet manufacturers working for you. Here are just a few of the most tried-and-true methods.
Every business has hidden costs involved in its operations. The most successful businesses work to identify those costs and eliminate them, if possible, or keep them to a bare minimum.
Therefore, among the top cost management strategies for pallet manufacturers to implement as soon as possible is to locate and eliminate hidden costs such as:
When looking for effective cost management strategies for pallet manufacturers, technology is an area not to overlook.
Pallet Costing System
There is, in fact, a type of software tool designed explicitly for this purpose. It’s called a pallet costing system (PCS), and it calculates both the per-unit and total cost to manufacture a particular order of pallets. Using such a tool allows you to better budget for any order of any size and, above all, price accordingly. You simply provide the order details and the relevant factors regarding your pallet manufacturing facility, and the software delivers an accurate result customized to your specific situation.
Be aware, however, that when you use such a tool, you also need to take into account certain key variables it doesn't account for, such as current market conditions. This is integral to making your use of a PCS truly effective in helping you to better manage costs.
Warehouse Management Systems
A technology-driven warehouse management system can help you more cost-effectively manage pallet storage and fulfillment. A software tool that works with digital scanners and serial numbers or SKUs helps your team more efficiently sort and locate the pallets you store and distribute. Another way such a system helps make your pallet business more cost-effective is by eliminating costly waste and inaccuracies in your warehousing operations.
Many, if not most, of your costs of running a pallet manufacturing firm are tied up in managing your supply chain. If you can make this process more efficient, you can considerably reduce your ongoing costs. One way to streamline your supply chain budget is to outsource your warehousing to a third-party logistics firm (3PL).
You can employ a 3PL to help you with nearly all aspects of pallet distribution, including:
By outsourcing distribution to a 3PL, you can recapture much of the time and expense you've applied to manage these tasks in-house and invest them instead in more economical and profitable ways, such as developing even more and better cost management strategies for a pallet business. A 3PL can also help you more efficiently and effectively navigate the fluctuations in order volume and demand that affect your profitability.
Offering your customers the option of plastic pallet pooling helps you manage costs in two ways: plastic pallets cost less to manufacture than wood pallets, and renting out pallets provides you with an extra avenue of income in addition to pallet sales.
Whether you’re manufacturing stringer pallets, which are less costly to make but also less durable, or wood block pallets, which are far more rugged but also a lot more expensive to build, you're forced to make a difficult trade-off. One way to compensate for the impact this makes on your bottom line is to offer your clients an alternative option that saves both of you money in the long run.
Pallet pooling programs link a network of suppliers like yourself together to better optimize your supply chain as you provide your clients the pallets they need when they need them and, when they don’t, allow those pallets to be taken off their hands. In this way, you have a smaller inventory of pallets to manage, which saves you the costs of managing more than you or your clients need. You also benefit from the access this provides you to a greater pool of clients in need of your services.
Including plastic pallet renting in your operations offers other benefits as well, including:
All the cost management strategies for pallet manufacturers in the world can only take you so far without a strong customer base to serve, which is why it’s so important to switch from a solution-selling model to one of value-based selling. This includes providing your clients with clear and properly drawn-up contracts that offer them beneficial terms exclusive to their particular commercial credit and needs. It also includes providing them with all the paperwork and other resources they need to pay you promptly, following up with those who require additional time to pay you, and handling disputes in a quick and professional manner. Most importantly, it involves attuning yourself to your clients' pain points and providing economical and efficient solutions.
In these ways, you’re not just focusing on making a one-time sale of a product; rather, you’re building lasting relationships with your clients built on the consistent value you're providing for them. That’s why it’s essential to make customer service a key component of your overall cost management strategy.
To stake your claim on a growing share of the booming pallet market, let a knowledgeable and experienced pallet marketing firm work for you. Contact Pallet Company Marketing today.
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