"Supply chain and procurement leaders need to ensure supply chains are fit for the future by moving closer to the customer and becoming more agile."
Tim Lawrence, PA Supply chain expert
The return to growth is having a profound impact on the supply chains of many organisations particularly as economic recovery is proving to be both highly unpredictable and highly variable by geography and sector. The return to growth means a profound impact on the supply chains of many organisations.
To tackle this, supply chain and procurement leaders need to develop more agile supply chains. They can raise agility in the supply chain by focusing on three distinct areas:
1. Introduce flexibility to the supply chain and collaborate with suppliers to fulfil demand
There is no doubt about the key role of the supply chain in creating real business value: producing and delivering quality products and services on a global scale, whilst fulfilling customer demands is more challenging than ever. Introducing supply chain flexibility across the end-to-end supply chain requires closer relationships with customers and suppliers enabled with better information and product flows.
2. Be creative and take difficult decisions with partners to free up cash
Although the benefits of cost reduction programmes are clear, organisations still need to maintain 'business as usual' whilst restructuring. It is here that many businesses hit a brick wall; access to credit from cautious banks is still limited so some organisations’ ability to raise critical funds for research and development are limited too.
Organisations have often taken an insular approach to releasing cash, such as reducing their inventories or changing payment terms. However, these strategies have wider reaching effects on the end to end supply chain. Taking a more inclusive and creative approach, increasingly, organisations are increasingly placing cash management on the executive agenda and looking to the whole supply chain and placing collaborative procurement and technology at the heart of the solution.
3. Get closer to suppliers through proactive risk management
Despite the fragile recovery, many businesses are still exposed to reduced revenues and increased commodity prices, coupled with a weakened supplier network. As uncertain growth returns, a key element for an agile supply chain will be to proactively manage supply chain risk by moving closer to suppliers.
Agility will be key to the fitness and success of future supply chains
In the current environment, supply chain and procurement leaders need to develop supply chains that are closer to the customer and more agile. Companies can increase agility by creating greater supply flexibility, getting closer to customers to release cash and getting closer to key suppliers to manage risk. Organisations have to look beyond survival and find ways to grow. This is challenging given that demand and supply markets have changed but now is the time to re-enforce the position of the supply chain function as one of the key sources of value creation.
To find out how PA can help you secure the benefits of a more agile supply chain, contact us now.