.png){kind=icon}
To sustain and grow your pallet manufacturing business, you need to not only increase revenue but also find ways to use those funds with increasing efficiency. Fortunately, numerous cost reduction strategies for pallet manufacturing businesses can help you to do just that.
One of the greatest overall ways to increase pallet business profitability is to shift your focus away from simply selling your customer's pallets toward providing them with value. Your customers can buy pallets anywhere, and while cost is certainly one factor they’ll consider in deciding where to buy them, it’s not the only factor. Convenience and service, for example, are others. Envision all the ways you can provide your customers with value besides your competitive prices.
For example, can you:
Encourage your customers to quit wasting time and money ordering deliveries of partial truckloads of pallets. The reason is that this not only saves them money, but it saves you money as well. Your customers might save a little in the short term by only purchasing the quantity they need, but they’ll pay more per-pallet costs in the long run. Meanwhile, delivering partial truckloads of pallets costs you more in wasted truck-bed space and extra transportation, vehicle maintenance, and labor costs.
You can also help mitigate these extra costs by charging an extra fee for partial-load deliveries, which can, in turn, incentivize partial-truckload orders in the first place.
Rush orders cost both you and your customers more. By better managing your lead times, you can make sure you have enough pallets and delivery resources on hand whenever your customers need to avail you of them. Filling a rush order can cost you more even with the proper resources. Therefore, charging a rush-order fee to compensate you for this added expense is reasonable.
Later, in the section on employing technology’s cutting-edge cost reduction strategies for pallet manufacturing businesses, you’ll learn how automated inventory control systems can help you to further optimize this process.
Your specialty is manufacturing pallets; the more time your business spends on this task, the more money it can generate. Therefore, eliminate as many other business-related tasks that aren’t directly involved in manufacturing pallets by outsourcing them to businesses that specialize in those tasks. For example, there’s no need to hire your own in-house accountant or IT personnel when you can more inexpensively outsource those tasks to specialists in those areas. You’ll save on wages, insurance, benefits, and physical space in your facility to accommodate their work.
You can save a bundle on supply chain costs by outsourcing those tasks to a third-party logistics (3PL) firm. These companies can help streamline your warehousing, fulfillment, shipping, and reverse logistics costs, all allowing you to focus on what you do best: manufacturing pallets.
When you have pallets you can't sell, such as those damaged or worn, don't just dispose of them; recycle, reuse, and repurpose them instead. This way, you not only eliminate scrap removal costs but supply and material costs as well. You can even offer your customers wood-waste removal programs in which you pick up their busted, old, and worn pallets and pallet refuse, then use that material to save on your own pallet manufacturing costs. This saves you money on one end and gives you an extra income stream on the other.
One of the easiest cost-reduction strategies for pallet manufacturing businesses is to stop paying late and interest fees on your invoices. Keep enough cash reserve on hand to pay your invoices in full when they come in.
Technology has invented several ways to save pallet manufacturers significant money. Pallet Costing Systems (PCS) are one type of software tool that helps you optimize the number of any type of pallet you produce at any given time. This allows you to better budget your orders according to the specifications of each order and your facility.
Warehouse-management software can also make your operations more efficient by helping you better manage pallet storage and fulfillment. These systems employ SKU codes or serial numbers with digital scanners to help your team more efficiently sort pallets you don't need to ship out immediately and locate and retrieve those you need to distribute right away. Such systems eliminate both costly inaccuracies and waste.
There are many cost-efficiency advantages to going green. Installing a water filtration system, using compact fluorescent or LED light bulbs instead of halogens or incandescents, installing insulation and window treatments, and the like may not save you a bundle at the outset, but the incremental savings they provide over time can add up to considerable savings ultimately.
Plus, your customers and their customers alike might find using pallets from a pallet manufacturing company that employs sustainable practices appealing.
Just like your customers have the option and imperative to choose the pallet manufacturer that offers them the greatest value, so too should you do your due diligence in finding the provider that offers you the greatest value, be that for materials, shipping, or any other supplier or service provider you utilize.
For example, choose a shipper with knowledge and experience in shipping pallets, even if they may charge a bit more than more generic shipping companies. The value they provide may be worth far more than the extra pennies you pay to hire them over a cheaper alternative.
You can set up bidding systems to find the provider offering the greatest cost value for your needs. You can also save money by finding providers willing to scale their services up or down according to your changing needs.
These are just some of the cost reduction strategies that are available to you for pallet manufacturing businesses. Far more exist that are also worth investigating. If you’re ready to explore all these options and discover the best methods for your pallet manufacturing company to cut costs & boost efficiency, reach out to us today.
.jpg)
