From insights come answers.

A series of articles from the Insider Pro team, in which we examine relevant topics and examples of current challenges that we see in our work with a huge range of organisations, across many sectors.

Create a killer supply chain strategy to ensure resilience in 2024

Posted by Jeremy Bowley
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Almost every route to higher revenues depends on a reliable and predictable supply chain. Whether you are the CEO, CFO or the Supply Chain Director, knowing that your supply chain weaknesses could suddenly derail this quarter’s numbers, is probably keeping you awake at night! Managing long-term risk, sustainability considerations and the financial impact of an inefficient supply chain can make the difference between business success or failure.  Conversely, there are plenty of revenue growth opportunities lurking in your supply chain or operations, hidden by poor data or a resistance to change.  Now is the time to expose them and reveal how to scale operations, improve deals with suppliers, leverage overhead and drive out inefficiencies.

Killer Strategy (2)

Most businesses spend up to 70% of the value of their revenue with external third-party suppliers.   This needs to be managed and optimised to protect the business but just as importantly, it offers huge opportunities to generate cash.  We see many companies that have overlooked the benefits they could receive if they were to re-assess and re-map their supply chain.

Your supply chain needs a strategic approach; balancing cash, investability and opportunity cost. Run your supply chain ahead of where you want to be rather than where you are now. Can your suppliers support your production or sales forecasts? Call your key suppliers and ask them what business they expect to do with you over the next month/quarter/year. You might be running your own inventory effectively or managing payment terms superbly, but strains elsewhere in the supply chain will usually end up costing you one way or another.  Go a step further and find out who your supplier’s suppliers are to make super clear what the risks are.  When you are a growing business, not solving these problems is like driving a car with the handbrake on and too much luggage in the boot.

Have clarity about what can be done to improve the business.  If you carry out a thorough analysis of your largest spend areas, you will quickly uncover opportunities for revenue growth as well as cost reduction.  Simple exercises, for example in Facilities management, will reap benefits where a look into the data will quickly reveal the balance between planned and reactive work and show whether you are paying appropriately for each. 

Set clear objectives and organise the supply chain around them. Build the necessary steps into a weekly and monthly review process.  Clean up your data and make sure you know what is being sourced from where and how those suppliers are performing.  Be able to predict what your competitors or suppliers will do if you take a certain decision. Build barriers to entry wherever possible.

Building enterprise value depends on fine-tuning all the dials on your metaphorical dashboard. Make sure Finance, Operations, Supply chain and Procurement teams are working on the same dashboard!  Doing this right doesn’t just add incremental value but is truly transformative.

Topics: Disruptive Procurement, Supply Chain Management