How to Strengthen Your Supply Chain for the Future
The supply chain has dominated headlines for a few years. Whether you run a machine shop, car dealership, construction company, law firm, restaurant or hospitality business, both you and your customers likely have unprecedented knowledge of shipping and delivery issues.
Northern Nevada has a complex supply chain, reaching beyond technology, construction materials and produce to gaming equipment, climate control and ventilation. Yet, at the start of 2022, many businesses operated with inventory levels close to all-time lows, according to Federal Reserve Economic Data (FRED).
If you are among those business owners casting a wary eye at your inventory levels, consider that supply chain management doesn’t have to be unpredictable. These five steps can help your business prepare for supply-chain ebbs and flows:
1. Reassess inventory standards. Traditionally, inventory calculations have been based on inventory turnover ratio. Today, backstock matters, perhaps more than ever. Consider calculating your need for excess inventory to compensate for supply chain-related delays. You’ll want to bear in mind your business’s trends, sales projections, and storage and credit limits.
2. Diversify your supply options. Nevada has seen firsthand the need for new supply chain solutions. Seeing that our state had a lack of rail pathways to connect to California’s ports and markets, Nevada in 2021 joined the Southwest Supply Chain Coalition to create more results-driven logistics planning. What routes do supplies take to get to you? Can alternatives do the same job or broaden your options?
3. Expand supplier relationships when possible. Many businesses commit to a loyal supplier or two. Today, while loyalty remains an admirable value, it’s wise to have a backup plan. Having various relationships can cushion hiccups in the supply chain process and help you stay flexible.
4. Speak to your banker about cash management and other payment strategies. Your money may be able to work harder for you — which can ease the strain of specific supply chain problems. Whether you make payments across Nevada or globally, your banker may suggest shifting your electronic and foreign exchange payment strategies to relieve payment delays.
5. Update your credit availability. Inventory and funding often go hand in hand. Your banker can help connect the two. If it has been a while since you reevaluated credit, you might qualify for a larger line of credit or a higher advance rate that will enable larger inventory purchases.
To learn more about how your banker can assist you in flexing with the supply chain’s ups and downs, contact your First Independent Bank relationship manager or find out more about what our bank can offer businesses like yours.