There’s an art to maintaining an efficient supply chain, as there are often things involved over which you have little or no control. While supply chains are always vulnerable to the influence of external events, the recent impact of the coronavirus pandemic is unprecedented.
However, while these are unusual times, there are still a number of measures that companies can take to help their supply chains operate more efficiently.
Top tips for improving supply chain efficiency
Control your freight
Every global shipment is governed by a set of rules known as Incoterms, which determine who bears the cost and responsibility at each stage of the shipping process. By ensuring you have control of your freight, rather than the supplier, you’ll be able to select the carrier that delivers the most efficient and cost-effective service.
Suppliers don’t typically have full visibility of costs at the destination and will often ship items on the cheapest freight rates, only for the buyer to be hit with excessive destination charges.
This can be avoided by taking control of your freight at macro level through developing a partnership with an integrated logistics provider and centralising all aspects of your logistics, instead of it being managed by multiple offices or departments. This will help with buying power, free up your team to focus on other areas of their role, and give you greater visibility of your products across the whole supply chain.
Utilise technology
Many logistics companies use technology that can help keep track of your shipments and stock levels, which can in turn automate the ordering process and facilitate overall control without the need for multiple spreadsheets or systems.
By integrating software through EDI and API connections with a logistics partner and your suppliers, you can share information and automate processes, driving huge efficiencies and enhancing visibility over your supply chain.
Take control of your cash flow
Companies often find that their cash is tied up in the product for months before it is actually sold, which can create cash flow challenges for many. By setting up a flow of small but regular orders from suppliers, it can ensure you don’t have too much cash tied up in inventory sitting in your warehouse, while still being able to meet demand. Through effective demand forecasting, you should know what times of year you’ll need to hold a higher level of stock, such as during peak seasons. Having products where and when they are required will make for a far smoother supply chain.
Establishing a duty deferment account can also ease the cash flow burden of VAT and duty payments for importers. Rather than paying duty on individual consignments, a duty deferment account allows you to delay payment of most customs charges, such as import VAT, customs duty and excise duty, and instead make one payment per month via Direct Debit.
Other ways to ease your cash flow include leveraging facilities such as bonded warehouses, where you can store goods without paying duty, and taking advantage of trade finance through options such as the government’s Exporting is GREAT scheme.
Diversify your supply chain
If recent events have demonstrated anything, it’s that being reliant on one country for your products can be a risky strategy. When China closed the majority of its ports and factories, the knock-on effects across the globe were significant.
While you could argue the current situation is not something that any business could reasonably plan for, it would be prudent to look at ways of diversifying your supply chain, ensuring that an unforeseen event in one country doesn’t impact your ability to continue sourcing products, servicing customers and generating revenue.
Find a logistics partner
You don’t source a different manufacturer every time you want to buy products, so why do that with logistics? A logistics partner can take a big-picture view of your supply chain and what you’re trying to achieve as a business.
Trying to do everything yourself and shave a bit off the cost here and there can result in a false economy due to the time invested in that process. You also end up having to keep track of a range of shipments being handled by several suppliers, as well as adapting to different processes and customer service levels.
More importantly, you miss out on the cost savings a logistics partner can offer and the value they can add to your business by having a full view of your supply chain and logistics requirements.
Partnering with a logistics provider is a smart move that saves time and money, and alleviates stress, freeing you up to focus on your core business activities.
Integrated logistics courtesy of Hemisphere
Working with an integrated logistics partner can deliver multiple benefits for your supply chain, including time and cost efficiencies, customs compliance and freight forwarding expertise.
At Hemisphere Freight Services, we take care of consultation, planning and delivery, allowing for tailored, seamless global logistics solutions that integrate with the operational and commercial needs of your business.
Our freight forwarding and supply chain services cover everything from air, sea and road transport to export packing, warehousing and customs clearance. Contact us to discuss how partnering with HFS can benefit your business.
