The topic of inflation has dominated recent headlines. According to a report from the Department of Labor, the consumer price index for all items rose 0.6% in January, driving up annual inflation to 7.5% — the largest increase since 1982.
As of February 2022, when inflation will abate is unknown. Therefore, businesses are looking for ways to lower their total cost of business and remain competitive in the marketplace.
What is inflation and how can businesses fight it?
Inflation reflects a decrease in the purchasing power of money, caused by an overall increase in the prices of goods and services. Increased demand and a shortage of materials and products are among the contributing causes.
As an example, over the last few years, the price of cars has increased drastically due to a shortage of needed materials, such as semiconductor chips. And with fewer cars on the lot, but demand remaining steady and even increasing in some instances, dealerships have had no choice but to increase prices to remain competitive. The supply chain disruption caused by the pandemic, which has fueled increased demand even as the labor market has shrunk, is the dominant factor in the current inflation spike.
Some companies have had no choice but to raise prices of products, and employee wages are not keeping pace with inflation. But higher prices can erode sales — especially when consumers are cutting back on expenses. To keep products affordable, companies can employ a variety of cost-management strategies:
- Assess expenses: One of the most effective ways to address inflation is to look at your total cost of business and eliminate nonessential costs. Companies may be able to identify opportunities to adjust their operating costs to balance out the growing cost of goods. For example, manufacturers interested in lowering their total cost of business may consider making changes to their current logistics operations. Engaging a pallet pooling company, such as iGPS, can lower an enterprise’s transportation cost along with decreasing warehouse maintenance costs.
- Explore new partnership opportunities: Now is the time for companies to assess their current vendor partnerships. This can be a highly effective tool in fighting inflation. A thorough review may identify suppliers who provide the same materials or products but at a lower cost.
- Optimize warehouse efficiencies: For companies that operate warehouses and fulfillment centers, managing overall costs can start here. Implementing warehouse technologies, such as self-driving forklifts, autonomous mobile robots, and drones ensures a smooth flow of operations and reduces error — adding up to significant savings in the long run even if up-front costs are higher. Implementing warehouse technology systems can also assist with the severe labor shortages many companies are experiencing.
Finding creative ways to lower the total cost of business and alleviate the impacts of inflation will be key for companies looking to remain competitive and resilient in today’s turbulent economy. Taking a hard look at expenses, partnerships, and warehouse practices is a great place to start.
Companies committed to lowering their Total Cost of Business and fighting inflation use iGPS plastic pallets for all their shipping needs. Our lightweight, recyclable plastic pallets are safer for workers and involve less costly time-consuming cleanup. For more information, contact us at 1-866-557-0047, email a specialist at [email protected], or visit our contact page.