Building a Resilient Supply Chain
Planning, Changing and Adjusting - It's as fluid as the water it sails on
Recent events have demonstrated to us all that if there was ever a time for a resilient Supply Chain, it is now. If you think the after affects of the past three years are behind us, think again. Some challenges may well be here to stay.
What should we be looking at, or worried about?
What should we be planning, changing, or adjusting?
We need to get our predicting heads on to anticipate issues and we must be agile.
Whilst it is tempting to breathe a deep sigh of relief, ensure you have your ducks are in a row for a resilient supply chain.
“You can’t judge a good week by having no issues. You judge a good week by how you have dealt with them.”
Prior to 2020 those purchasing from China planned for a Chinese New Year (CNY) that disrupted the supply chain for 4 to 5 weeks (OK maybe a little longer with some factories I hear you say) Some ordered ahead to anticipate it, but then 2020 landed and CNY lasted for nearly 20 weeks.
Those too reliant on China’s low-cost sourcing realised they had to change. When the entire world was engulfed with the pandemic, many forgot their over reliance. Let this be a prompt to remind you.
It is not just about China, though it still remains one of the largest low-cost manufacturing locations for volume, it’s about the learning we need to take from its over-reliance.
Consider the regions that you purchase from and balance the risk. Act now, it can take up to 18 months to even move part of your sourcing to another region.
Working capital right sized
Many businesses try to have everything available all the time. It can be done, but at what cost? Cashflow running short has been the deathblow for many a business.
Where is your cash usually stored? A big draw on your funds is your stock. Invest in your planning systems and cultivate your planning talent. Build a behaviour across your business so that both purchasing and sales arms are in harmony. Know exactly what you need, when you need it and in what volume.
Critically deal with the excess and obsolete stock. This frees up cash to spend on the stock that you are selling in volume. Third party businesses can make this easier for you. Engage with them.
Get closer to your customer
Disruptive times may have caused your customer relationships to become strained. Worse than that is when they have dwindled away, and you don’t even realise it. Pick up the phone. Visit that customer you haven’t seen for a while. Understand their plans. Work together. It takes two to be successful. Rebuild those relationships with a new energy, collaborate to ensure you help each other.
Be ahead of the game
At last year’s global DIY summit in Copenhagen Rik Vera advised us to have a new KPI, the "curiosity factor". We have introduced this with several of our clients with great results. Get a feel for things about to happen. Be curious. Ask why something is happening. Connect the dots. Understand the picture that is being painted and react to it before it becomes a portrait of disaster. Anticipation will get you ahead of the game. If you are speaking to your factories, don’t just ask them about them and their production, ask about the economy, the factory view, their prediction of upcoming issues. You will learn things that may well give you an edge on the market and propel you beyond your competition.
Cost reduction focus
We are a time of inflation. The cost of living has soared and might go even higher. There is no better time to deliver cost reductions, efficiencies, and savings. Everything from your logistics, to knowing where the main players are and what they should be charging will deliver immediate savings. Implement manufacturing efficiencies to deliver more in the same amount of production hours. Build the leverage you need to extract cost from the supply chain.
Additional costs are coming. Some are already here. Plastic and recycling taxes will only increase. The draw on resource to ensure you are doing the right thing for your eco credentials and CO2 footprint should not be misjudged, the time to get busy is now. Prepare for the new challenges that will come. To be ready, implement your resilient supply chain.
Reach out if you need support
With so many areas to focus on, you may be overwhelmed and asking yourself where to start. We are here if you need to chat.