Factors That Affect Costs in Your Supply Chains

Having a solid supply chain is one of the most important things you can do to make sure you are able to successfully run your business. While each business’s supply chain will look a little different, depending on their products and services, there are some areas that you need to understand regardless of your industry.


The type of transportation you choose to ship your materials and products is going to have a direct effect on how much money it costs you to obtain them. The main forms of transportation for freight shipping are ground, rail, air, and ocean. Depending on where you are located and where your goods are traveling from, you will likely have to use a combination of at least two of these methods. 

The most common two to use are ground and ocean. This is because they can carry the largest amount of material at a time, they are fairly reliable, and they tend to be the cheapest. You can usually get things shipped the fastest if you use air transportation, but this is prohibitively expensive compared to other methods, so make sure you have the budget if you choose to use this method.

How You Source Materials

Where you are shipping things from and how long it takes to arrive is also going to factor into your costs. Time is money in the supply chain, and having delays can be a huge problem. Additionally, depending on where you are shipping things from, you may have to pay import fees or tariffs. 

Tijuana is a fast-growing hub for manufacturing on the U.S.-Mexico border. There are also more desirable areas of the world to source your materials from, depending on what you are trying to source. While you may be able to source some materials from a variety of places, there will always be a place that has cheaper prices. Just make sure that they are cheaper prices because the materials are more plentiful, not because of unethical behavior or scams.

World Events

As we have seen over the past few years, world events can play a huge role in both the stability of the supply chain and the costs associated with it. Backlogged ports, limited space for shipping containers, and the higher price of goods all play a role in the cost of working through your supply chain. Additionally, even if everything is running smoothly, freak accidents like the obstruction of the Suez Canal can cause setbacks as well. There isn’t much you can do to prevent this sort of thing from happening, but you can diversify your supply chain sources to prevent a complete shutdown.


Understanding how your supply chain costs are accumulated can help you keep prices down and things running efficiently. Make sure you are regularly evaluating how you source your materials and assess any weak spots and how they can be improved.

Did you enjoy this article? Here’s more to read: Common Obstacles to Profitability in Your Business

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