Although the days of lockdowns and strict restrictions are behind us, it’s no secret that life as we know it has changed. And, just as your business was progressing through a recovery phase in 2022, you’re facing changes in tax levels, energy costs and import delays.
Even if your business got ahead of these changes, the impact can still be felt further down your supply chain. In late May 2022, The Office of National Statistics found that a third (33%) of trading businesses reported that their production and/or suppliers had been affected by recent increases in energy prices.
Though many of these factors are out of your control, here’s how you can prepare for the impact they could have on your supply chain.
How to best manage your supply chain
1. Diversify your supply chain
In 2021, McKinsey surveyed a diverse group of supply chain executives to find out the steps they’ve put in place to best manage their supply chains. 93% of respondents intended to make their supply chains far more flexible, agile and resilient. And 90% revealed they’ll be pursuing regionalisation – breaking down their supply chain into smaller regional locations.
With global conflicts, heavy import taxes and import delays, diversifying your supply chain can be a good strategy to reduce risk for your operations. Doing this will spread your demand and reduce your level of dependence on one single supplier. That way, if any issues arise, your business can still keep running as normal. Supply chain diversification can offer you more flexibility and agility, which are critical when the market faces disruption.
2. Monitor the risk of the companies you work with
Our second tip is all about getting to know the companies you work with. By understanding the financial stability of your suppliers, you can better protect your cashflow and ensure your supply chain is operating smoothly.
With Capitalise for Business you can check a UK company’s credit score, get alerts on their credit position and monitor their payment performance. This is key information that can help you determine the right suppliers to work with as well as the payment terms you should offer. You can also check existing and prospective customers to get a good sense of whether your invoices are likely to be paid in full and on time.
You can make sure your business is protected by actively and frequently keeping track of the creditworthiness of the companies you work with. Doing so will help you get ahead of any unexpected disruptions to the way you do business.
Find out more about using Capitalise for Business to monitor risks in your supply chain.
3. Supercharge your supplier communication
In our recent research, we found that 71% of business leaders find having personal relationships with suppliers helps them do better business. When it comes to keeping your supply chain running efficiently, improving your supplier communication can create huge opportunities.
ISS Group states that developing strong supplier relationships helps promote trust, improve risk management and support long-term goals.
Trust: Keep your communication strong, positive and transparent.
Risk Management: Open and honest communication encourages committed relationships where suppliers keep you up-to-date on any changes to operations ahead of time.
Supports long-term goals: When you focus on having frequent conversations it can help you build more personable relationships rather than just transactional. This can lead to shared ideas, knowledge and more efficient processes.
Nurturing supplier communication and building strong, lasting relationships can have huge benefits. In some cases, these efforts can lead to improved trade credit and supplier credit terms as you become more confident and assured with the people you work with.
4. Always look ahead
It means you can better “understand where you currently are as a business, where you want to be and what you need to do to get there. Whilst helping you identify obstacles in the environment that may impact your business plans.”
In our recent article, we talk about getting out of “reactive mode”where you respond to challenges and opportunities when they impact you. Instead, try focusing on being in “proactive mode” where you better prepare yourself ahead of time.
This is vital to your supply chain management in the current climate. By looking at your business position and your risk factors, you can better understand how to build out a more resilient way of working.
With Capitalise for Business Pro, you can get all your business finance insights, in one place. You’ll be able to analyse your payment performance, track your full credit profile and monitor risk factors heading your way to prevent business threats.
If you have seasonal demand, you’ll be better able to understand how to manage your cashflow and supplier terms to best suit your business. You’ll also spot times you need to adapt your supply chain –reduce supply quantities or alter trade credit. You can also access better fit funding during busy periods or when it’s time to take the next step.
Capitalise Pro also provides instant alerts and notifications to changes in your credit score and payment trends. This helps you to negotiate better terms with suppliers and sustain healthy business growth. Check out the platform here.
Secure your supply chain
There it is! Our four tips to keep on top of your business supply chain. Not only will these help you adopt a proactive approach to business, but you’ll also feel more in control and confident about the future.
As industry changes and socio-political factors give rise to new uncertainties, use these tips to get ahead of the curve, grow a healthy, sustainable business that’s protected from the unpredictable.
Find out about securing your supply chain – and more – with Capitalise for Business.