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How a Flexible Supply Chain Can be an Impactful Differentiator

Posted by Gil Oliva on Wed, Mar 19, 2014 @ 08:01 AM

Are you able to respond quickly to a change in demand? How about a major disruption to the distribution or manufacturing process?flexible_supply_chain

On an operational level, how quickly can your company react to problems or opportunities in the short term, such as a late delivery, a customer needing extra items on a large order, or items that were due to be delivered by ground now need to get there overnight. On a larger scale, your company wants to start selling on the web, or a product is changing design or certain components, and therefore disrupting the production process. What would it take to change the direction of your supply chain?

A successful business is able to quickly respond to sudden alterations in demand. The need to be able to adapt to sudden change is vital in today’s rapidly advancing world. This has become harder in an economy that demands efficiency. The recession witnessed a drop in demand, which saw many companies trimming inventory and cutting costs in supply chain operations. However, a company with a weakened supply chain struggles to keep pace with economic recovery.

Albert Sun, and Glen Goldbach, directors of PricewaterhouseCoopers LLP, recently wrote an article in Industry week, discussing how a flexible supply chain delivers value. They reference how important it is for organizations to be able to accommodate swings in supply and demand. The article states that in 2013, 64% of respondents to PwC’s Global Supply Chain Survey said they plan to implement greater flexibility to better respond to shifts in volume.

The article concludes with the advice that “a flexible supply chain organization requires not only a strategic leader, but also input from managers who represent the traditional supply chain functions of planning, sourcing, manufacturing, logistics, and also sales and marketing, among others. This enables the supply chain organization to work closely with these potentially disparate business groups to better understand their individual operations, goals and deadlines.”

What processes should your company adopt to increase efficiencies and flexibility?

  • In the scenario where your company has several plants, work towards the ability to move production between plants should the need arise.
  • Adopt uniform practices and replicate processes across plants
  • Use parts that are easily interchangeable from one product to another
  • Train employees to work in any plant
  • Set up concurrent rather than sequential processes so production is not completely disrupted if one area fails
  • Maintain strong supplier relationships

No matter how flexible you're able to make your supply chain, your company will not succeed without strong relationships with suppliers. In an unforeseen situation, a strong supplier relationship means you are in touch with their processes and their inventory and you can rely upon them to deliver.

Being prepared is vital in any market sector, as is the ability to react quickly to change. As with any business situation, available working capital can make difference between success and failure. Paying suppliers on time is a huge factor in gaining their trust and willingness to help in a tight situation. If they know payment is guaranteed and they will not have to wait, they are more likely to help you out than your competitor. When it comes to needing cash quickly for maximum flexibility, conventional loans or lines of credit may not be the answer as they take a while to process. Planning purchases in advance enables you to maintain an edge over the competition. Invoice factoring will facilitate prompt payment, which in turn enables supplier discount negotiation, new order fulfillment and ultimately helps your business grow.

Learn more about Accounts Receivable Financing

Topics: Cash Flow Solution, How to Grow Your Business, The Benefits of Invoice Factoring, About Invoice Factoring

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