By Lyndsey Hall
Before the current Covid-19 crisis, for most businesses, sourcing supplies was all about pricing, timing and making savings where possible. Now that supply chains have become disrupted, the priority is to keep operations online by making sure those supply chains keep flowing. Here are our five top tips for building a truly resilient supply chain.
1. Timing is everything
Volatility wreaks havoc on traditional supply chain planning. Production levels, raw material purchases, logistics and order fulfillment become almost impossible to forecast. In the current environment, orders of raw materials and supplies are more likely to be delayed. You should build in some extra time in order to ensure you don’t run out of stock before your next order is delivered.
2. Stock up (but don’t stockpile)
Having a safety stock is a common approach to managing supplies during times of uncertainty. You don’t want to have too much cash tied up in extra stock but having a sensible buffer can be helpful in smoothing out procurement issues.
3. Diversify your supplier portfolio
Working with a single supplier is risky. If you are dependent on one single supplier, it makes sense to do some research and identify a second supplier that you can use if your supply chain is cut off due to delivery issues, disruption, etc.
4. Manage expectations
On the sales side, it may be necessary to manage your customer’s expectations regarding delivery timelines. For example, if you are an online retailer, it may take longer for goods to be delivered to customers through the mail. Up front communication with your customers is always best. If they know that there is a chance of a delivery being delayed, they are less likely to complain if it actually happens.
5. Negotiate terms
Managing cash flow is particularly important in uncertain times. You may find that your suppliers are less willing to give your firm 30 days credit. If possible, you could try to negotiate a discount for settling invoices within 14 days. After all, cash is king.
If you’d like even more ideas and suggestions for small changes that could have a hugely positive impact on your cash flow, download our free eBook Happiness is a Positive Cash Flow. And let us know your best tips for a strong supply chain that makes cash flow management easy, leave a comment below or head over to our LinkedIn page.