Deloitte sets out our-point plan to squeeze supply chain costs

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Manufacturers need to be tactical in their approach to supply chain management to survive the downturn, according to consultants Deloitte which has set out a four point plan, for more resilient and efficient supply chains. These are:

1. Manage the initial deal process and revisit regularly;
2. Understand your business internally;
3. Optimise internal processes; and
4. Know your supplier and their vulnerabilities.

Phil Symonds, associate partner in the supply chain management group at Deloitte said: “In the midst of the current economic climate companies are faced with making critical supply chain decisions that will help them withstand the downturn and be in a strong position for the recovery.”

“Companies need to continually revisit what they agreed in their commercial offer, namely their customers, products and terms of agreement, even if this means that the customer is not always king. The supply chains can make a substantial difference to the cost base and so trade offs in margins where markets tighten up competitively need to be explored. Businesses must also ensure honest forecasts are made, that various function areas collaborate in the planning stages and that planning processes are executed with discipline.

“Within their own four walls, companies must go back to basics and question the reason for their inventory, understand drivers such as lead time reduction and conduct a supply chain strategy. Externally, companies need to ensure they are close to their suppliers and understand their business and its circumstances. Unless businesses take time to understand which parts of their supply chains are at risk of collapsing, they might find themselves struggling to cope with unforeseen and uninsured losses, moreover for those with strong P&L’s and balance sheets supporting suppliers through buying forward or acquiring suppliers might be the only solution”.

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