Supply Chain Profit Leaks - An Easy Fix - Step by Step Guide

All Supply Chain leaks profit / cash. But how do you find and stop those losses? Steven gives a detailed approach to understanding product and customer profitability. Case study is fictitious, but based on real life situations. 👉 More Resources 👇

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TIMESTAMPS (in case you want to skip) 👇

0:00 Intro
0:37 Logistics Bureau Story
1:11 Steven Thacker Topic Intro
3:25 Distribution Cost
8:28 Warehouse Actions Internally
12:32 Inbound Shipping
15:37 Inventory Optimisation
19:05 Optimisation Mode
22:10 Client Question on Big Savings
23:45 Cost to Serve – Progression Summary
37:37 Outro

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👏 Getting In this video, we dive into one of the biggest opportunities that so many companies overlook – using your supply chain not just to move goods efficiently, but to boost profitability. At Logistics Bureau, we see this all the time. Some businesses absolutely nail it, measuring customer and product profitability right through their supply chain. But far too many are missing out – and it’s costing them serious money.

To bring this to life, we share a detailed case study of a major apparel importer here in Australia – part of a multinational, with one centralised warehouse serving an omni-channel network: big retailers, their own stores, and a fast-growing online business. This client was already serious about driving productivity and cutting supply chain costs, with a dedicated team working on continuous improvement. But we helped them take it to the next level – starting with their distribution network.

Instead of a traditional tender that just hammers supplier rates, we used a collaborative tendering approach – identifying waste on both sides, re-configuring the network, and embedding a continuous improvement programme. The result? A 28% reduction in total distribution cost – without the successful transport companies lowering their rates.

Next, we moved inside the warehouse. Over months, we optimised every zone – from receiving and storage to picking – using slotting analysis, better processes, and minimal capital investment. That delivered an 18% warehouse cost saving, while setting them up for five years of projected growth.

Then it was time to tackle inbound shipping. At the height of global freight rate spikes, we analysed sourcing lanes, negotiated directly with carriers, and even explored re-aligning the sourcing network to reduce risk. That project delivered multi-million-dollar savings, improved continuity of supply, and gave the business a five-year inbound strategy.

But we didn’t stop there. We helped the client optimise inventory through better planning (S&OP) and inventory modelling, before moving to the most advanced stage: end-to-end optimisation. This meant breaking down silos – weighing up the trade-offs between inventory, transport, and handling costs, and making smarter decisions about where to store, pick, and ship from.

And that’s when we addressed the final piece of the puzzle: Cost to Serve. Because even the leanest supply chain can still deliver products at a loss. Using our five-pass approach, we allocated every relevant cost – gross margin, inventory holding, warehousing, transport, and overheads – to individual products and delivery points. The results were eye-opening: in one example, nearly half the products and a third of the customers were losing money once all costs were considered.

The power of this analysis isn’t just in finding the leaks – it’s in knowing which levers to pull. Sometimes the fix is as simple as correcting pricing errors. Other times, it’s changing delivery methods, re-locating inventory, or adjusting order profiles. Price increases are a last resort – there are usually many ways to turn loss-makers into profit-makers without losing customers.

If you want your supply chain to be more than just an efficient machine – if you want it to become a real profit driver – this case study will give you plenty of practical ideas to get started.