Could austerity be damaging your brand?

What exactly is austerity?

According to the Oxford Dictionary, austerity is ‘difficult economic conditions created by government measures to reduce public expenditure.’ When economists speak of austerity, it generally means that the economic cycle is being ignored e.g. if there is economic growth, tax revenues will still rise and spending on benefits will still fall.

For individuals, austerity for them is when they live within their means – in other words, they spend less than what they earn. For companies, austerity involves reduction in spending, minimising expenses and even making staff redundant in order to make savings…in other words, cost cutting.

Is cutting costs always good for business?

Cost cutting in businesses can happen for several reasons e.g. to improve financial performance, to lower expenditure, to improve profit margins and even to reduce debts.

Many businesses make the mistake of making cuts on certain operations that have a big impact on the profitability of their business…especially if the cuts have been made to the supply chain. 

If you think your company and your customers are going to receive high quality customer service if you choose a cheap logistics solution, then think again…let us give you a recent real example from one of our business associates:

One of their clients was looking to make cost reductions to their supply chain and decided to switch to an alternative 3PL provider. Not long after, their new supplier proved to be worth their cost with goods being damaged and agreed collection times being missed. When the company questioned their new 3PL provider, there was no apology…just a simple ‘well these things happen’. Because of the issues caused by their 3PL provider, deliveries were late, money was lost and their customer experience was compromised.

When it comes to logistics, a lot of mistakes can be made when moving products from one place to another. However, in this scenario, a high quality 3PL partner would have offered a quick alternative solution that kept the company in the loop, minimised disruption and ensured that the end user was not impacted or at least, the impact was kept to a minimum.

Have you recently chosen to partner with a low cost 3PL provider?

Ask yourself…

• Can your business afford a drop in the quality of your service?
• What are you going to do if your products are damaged in their care?
• Can you afford to have the moral of your staff drop?
• When deliveries go wrong, who will the customer blame?
• Who will refer you when problems keep happening?
• How will your business continue to grow if your customer experience keeps being compromised?

Offering high quality customer service is not possible with a cheap logistics solution. Building relationships and partnerships with your customers takes time, and these relationships can quickly disappear if mistakes keep happening. While you may save costs in the short run, you may find yourself spending even more money in the long run, preventing your business from growing and being profitable.

The efficiency of your supply chain is critical for the success of your business, and if there is a glitch, it can be costly.

If you would like to find out more about how to operate a healthy, productive and profitable supply chain, or about how a 3PL could help your business, contact us today on 01353 648222 or email [email protected].