David Staziker's viewpoint on developing your supply chain

 

David Staziker, strategic investments manager

In my last viewpoint I talked about targeting international markets profitably, but to make the most of such opportunities, you should really review the cost-effectiveness of the supply side of your business.

 

Investing in your supply chain can have a significant long-term impact on your bottom line and there are many practical steps you can take to increase efficiency, improve quality and reduce your costs.

 

What does it all cost?

 

Do you really understand your cost base, including any niggling hidden costs?

  • Could you reduce your storage and transport costs, for instance?
  • Could you procure on a sale-or-return basis, perhaps or maximise your credit terms?
  • What credit insurance could your suppliers obtain for you?

Negotiate hard to get the right quality and service levels from suppliers - you may be pleasantly surprised with what you can achieve!

 

Improve quality and reduce costs

 

Do you purchase the materials, components and services you need from the most cost-effective supplier? Have you ever considered international sourcing or production?

 

Internationalising your supply chain could help improve your product/service quality and reduce production costs, but you need to think carefully about the associated risks. If you’re buying bulk, think about your hedging strategy.

 

Does your business have the technological advantage?

 

Using your IT systems efficiently to manage your supply chain can pay significant dividends, enabling you to procure and deliver your products quicker and more cost effectively. For example, your web site shouldn’t only be used by your customers – you could develop it so your suppliers can understand your likely future ordering profiles.

 

Make the most of what you’ve got, but have a plan B

 

Really understand your product’s USPs and structure your supply chain appropriately so you procure non-core components/services effectively, but keep your key technologies in-house to prevent copying.

 

What’s your plan B? Ensure you have a minimum of two sources of supply so you can cope if something happens to one supplier?

 

If some of these ideas could work for your business, talk to us.

 

Find out more about Finance Wales’ investment criteria.