Supply chain management key to survival in the downturn

In order to survive and thrive in the downturn, manufacturers need to be tactical in their approach to supply chain management, according to industry experts at business advisory firm Deloitte.

Jane Lodge, Midlands manufacturing industry leader at Deloitte, said companies needed to make critical supply chain decisions in order to withstand the downturn and be in a strong position for the recovery.

Ms Lodge said there were four key areas that manufacturing businesses needed to focus on to create more resilient and efficient supply chains, including managing the initial deal process and revisiting it regularly; understanding of the business internally; optimising internal processes; and knowing suppliers and their vulnerabilities.

She said: “Companies need to continually revisit what they agreed in their commercial offer, namely their customers, products and terms of agreement, even if this means that the customer is not always king. 

“The supply chains can make a substantial difference to the cost base and so trade offs in margins where markets tighten up competitively need to be explored. Businesses must also ensure honest forecasts are made, that various function areas collaborate in the planning stages and that planning processes are executed with discipline.”

Ms Lodge said companies must go back to basics and question the reason for their inventory, understand drivers, such as lead-time reduction, and conduct a supply chain strategy. Externally, companies must also ensure they are close to their suppliers and understand their business and its circumstances. 

She added: “Unless businesses take time to understand which parts of their supply chains are at risk of collapsing, they might find themselves struggling to cope with unforeseen and uninsured losses, moreover for those with strong P&L’s and balance sheets supporting suppliers through buying forward or acquiring suppliers might be the only solution.”

ENDS

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