What Businesses Must Do to Nurture a Healthy Supply Chain
If you are going to run a business, you can be sure that there will be disruptions down the road. Many factors are not in our control (like the Covid-19 crisis), and the best we can do is become more resilient. One of the things we can do to prepare our businesses for unexpected problems is nurturing a healthier supply chain. And the way to do it by redesigning the supply chain to make it more responsive and agile. Here are a few things you can do to make your supply chain more resilient.
Prepare for unforeseen effects
When you are a businessman, it is always a good idea to expect the unexpected and prepare for it as best as you can. Here’s an example. Currently, corrugated box manufacturers in India are facing a terrible crunch of kraft pulp because suppliers have increased their exports to China.
China has banned the use of recycled paper to make corrugated boxes (because it causes pollution). This has caused Indian paper pulp exports to China to rise to 2 million tons in 2021, from almost nothing in 2018. If these Indian corrugated box manufacturers had only prepared for such cases by running contingency models that had factored in such disruptions, they would have been better prepared to deal with them.
Keep a track of your suppliers
Companies are more likely to come out of emergencies with minimal damage if they have a strong supply chain. But you can’t do that unless you know your suppliers well. For example, during the Sendai (Japan) earthquake of 2011, many Japanese businesses were not able to understand how the earthquake was affecting them because they didn’t know their upstream suppliers. By the time they realized it, it was already too late. The take away from this is, you should keep track of your suppliers because once there is a problem, it might be too late toy things.
Go through the design of your supply chain again
Until recently, most businesses had taken it for granted that nothing could happen to their global supply chains thanks to free-market capitalism. Then Covid-19 hit, and supply chains dried up quickly. Many businesses were caught unaware. Many of them hadn’t even kept track of their accounts payable, especially those dealing with a large number of invoices. A product like SkyscendPay, which uses AI, Blockchain, and OCR technology to simplify invoice and procurement processing, could have made a world of difference to these companies.
Businesses need to redesign their supply chains to reflect this new reality, and there are many ways to go about it. For example, increasing local sourcing and getting a second supplier on board as a contingency.
Reduce operational inefficiencies
Neglect your supply chain at the peril of reduced business performance. Invoice processing, one of the tasks in supply chain management, is not a cost center. An inefficient invoice process can take a big chunk out of your profits by delaying payments or, if you are a buyer, making your suppliers angry (because their payments are delayed). A well-oiled supply chain or procurement process can add a ton of value to your business. Consider using SkyscendPay to automate your invoice management process.
Bring in supplier diversity
If you have been running a business for some time, you would have realized by now that supplier disruption is not a question of ‘if’ but ‘when’. One of the ways to prepare for disruptions in supplies caused by natural disasters, border disruptions, regional issues, and political unrest is to diversify your supplier base.
More specifically, look for smaller suppliers because they need your business and are likely to be more responsive to your needs and agile. Another benefit of working with a smaller supplier is that it will also help you comply with many government requirements designed to encourage smaller businesses.
Pay attention to how you onboard your suppliers
Onboarding suppliers is fraught with many complexities. You have to validate many factors; for example, find out if the supplier is a proper legal entity that follows tax laws and other legal requirements and if they are financially solvent and capable of meeting your needs. Having a proper vetting and validation process in place can help you avoid the pitfalls and uncertainties that may affect your company. Technology can help you streamline these processes.
Monitor your supply chain constantly
There is an old saying – ‘what you don’t measure, you can’t improve’. It is essential that you monitor your suppliers constantly. This will not only help you prevent inventory excesses, production shortfalls, and financial waste but also ensure that continuity is maintained and risk is centralized.
If you want to develop such a program, you need to onboard a technology that will allow you to act on these changes and help you undertake continuous monitoring. SkyscendPay is not just an invoicing or invoice processing platform. It has capabilities, like supply chain financing and dynamic discounting, that make it useful in a number of other scenarios.
If you are running a business and dependent on a supply chain, you must prepare for contingencies that can disrupt it. Luckily, technology is a great enabler. Automating some of your processes can give you more time (and money) to strategize and create contingency plans.
SkyscendPay is an advanced invoice and invoice processing platform built with AI, optical character recognition, and Blockchain. It extracts data from a large variety of invoice formats, which can be validated on a central dashboard later, and offers features such as supply chain financing and dynamic discounting that can help you run your procurement processes securely and seamlessly.