Every business has a supply chain of sorts, from paying for the toilet roll or flowers in reception, to supplying microchips or motherboards for the latest piece of kit. But at what point as a business do you need a supply chain management system and which one do you choose? Getting it right can make a business more streamlined and profitable overnight – especially if the system is free.First of all, why does a business even need a system? Well, supply chain management systems essentially ensure that you have the right product available at the right time, with the right price. It’s also vital in aiding the optimisation of order quantities for warehouse capacity, and ensuring that not too much inventory is being held, which can impact on cash flow. But choosing one can be daunting – unless you follow some simple steps:
1. Make sure it worksSpeak to the managers of the system, understand how and who it works for right now and ask how much downtime they have experienced in the past 12 months – it’s useless if it’s causing more problems and losses than gains. And don’t be afraid of cloud systems as the pros far out-way the potential downsides.
2. Make it work financiallySupply chain management systems are there to increase efficiencies within your business, so if it costs hundreds of pounds per month, combined with downtime and business flow loss, what’s the point? Make it work for you. The new wave of systems, such as Crossflow Payments’ platform that is cloud based and provides access to supply chain finance, now incorporate the latest technology and techniques to allow the system to be free for buyers and suppliers.
3. It doesn’t need to be complicatedI’ve seen some horrendously ugly and complex systems in my 20 years in the sector. Managing the supply chain isn’t the most enthralling job, however, it is one of the most vital for a thriving business. It can be easy to overcomplicate supply chain systems so always try before you buy. Explore a number of systems and get used to the look and feel. It’s a little like buying a house, you will know within the first few minutes of using a system as to whether you like it or not. But as with property, it is important to go and take a second and third viewing before committing.
4. Don’t be complacentFor businesses already with a system, the thought of changing to a new provider can seem unappealing and a lot of effort. But that shouldn’t stop you from looking at the latest developments in the market as things have moved on significantly in the past 12 months. Go and speak to the new providers and understand the implications of switching – you might be surprised at how much simpler it is compared to just 12 months ago.
5. It’s not all about you as a buyerYou are a supplier yourself – or have been at some stage – so don’t just consider the up-sides for you as a buyer. Think about how the system works for suppliers and whether one works better than others, without jeopardising anything on the buyer side. Some systems are better at this than others. For example, we have integrated the flow of finance for suppliers into our supply chain management system by adding P2P lending into the infrastructure. Lack of cash flow is one of the biggest challenges for suppliers so having a system which allows them to access funds owed to them on a 60, 90 or 120 day invoice is hugely attractive. In essence, we support buyer–supplier transactions from invoice processing and approval through to payment of those invoices and subsequent settlement to the P2P lender. It’s simple and impressively successful, allowing suppliers to grow and develop to the potentially further reduce production costs and grow to the benefit of buyers. The supply chain is at the very core of all businesses, so make sure you get it right. Tony Duggan is CEO of Crossflow Payments.
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