Thanks to globalization, it’s possible for manufacturing companies to source components and raw materials from all over the world and keep their own stock levels low. However, the coronavirus pandemic has mercilessly exposed the vulnerabilities of that system. The current crisis has shifted the focus onto spreading risk, being creative and working with dependable supply chain partners. But how can you put that in practice, and how can you tell whether you’re on the right track? We’ve put together these 6 tips to strengthen your supply chain.
Tip 1 – Maintain a tight grip on debtor management
The pressure on the economy is placing a strain on business finances. Declining revenues, sometime by as much as 30%, are causing liquidity to dry up. And that goes for more than the worst-affected supply chains. Customers are altering their payment terms and paying invoices later. Investments are being put on hold. Government support has limited the number of bankruptcies so far. But that’s no reason to loosen your grip on your own debtor management activities. Avoid quibbles over what you’re owed by sending out correct, complete and timely invoices.
Tip 2 – Choose the right carrier for you
Consumers weren’t the only ones to go into panic-buying mode as soon as the various lockdowns were announced… Many companies did the same, resulting in depleted stocks and a rush to scale up production capacities. Carriers initially struggled to cope with all the extra work, but the demand dropped off again just as quickly in the subsequent months. Such severe fluctuations may be exceptional, but they do make you stop and think. Whereas price used to be the determining factor, scalability, delivery reliability and risk spreading now play a much bigger role. They should therefore be taken into consideration when choosing which carriers to work with. Evaluate your own selection criteria and reset your priorities if necessary. We’re happy to help you.
Tip 3 – Optimize your shipments
If your volumes, frequencies and destinations vary then it can be worth optimizing your shipments, especially in the case of international transport activities – and more so today than ever before. When a neutral 4PL party like IDS consolidates your freight flows, the risks are spread equally between multiple customers and everyone receives a fair share of the cost benefits.
Tip 4 – Share your data
Even though the coronavirus pandemic has revealed that the interdependencies in the supply chain are bigger than expected, most companies are still reluctant to share their data with others. This reticence means that problems in freight flows can often go unnoticed. By sharing data about the types and quantities of goods, their origins/destinations and the desired arrival times, manufacturers enable all the links in the supply chain to organize their own processes more effectively. And, equally importantly communicate much more accurately about delays, border controls, waiting times or inspections.
Tip 5 – Do more with the same number of people
Although unemployment levels are rising, there is no sign of the labour shortage easing in the logistics sector. In fact, booming online sales are driving a further increase in demand for logistics employees. Retraining will no doubt offer some solace in the longer term, but the easiest solution in the short term is to do more with the same number of people. Outsourcing time-consuming non-critical tasks such as claims and bill control will allow your employees to focus on activities where they can really make a difference.
Tip 6 – Small steps, big impact
At the macro level, it’s easy to say that the key to reviving the economy is for businesses to keep investing and for consumers to keep spending. In reality, companies usually prefer to take a more cautious approach. However, even if you’ve decided to hold off on your investment in IoT technology for now, you can still take a few small steps in the right direction.