In most of the developing world, inflation is at its highest rate in 40 years, which has a direct impact on business, all over the world.
As costs rise, every penny we spend gets scrutinized. More than ever, businesses need to be able to quickly perform cost/benefit analyses and determine the potential ROI of investments. Raw materials and energy cost a lot more, and while sustainability and waste reduction become matters of economic survival and not just environmental concerns. Companies are looking at all ways possible to reduce energy and fuel consumption, and to streamline materials usage in manufacturing.
Simply scaling back spend or passing on rising prices to consumers rapidly becomes an unsustainable approach for companies to keep their profits and margins intact.
The best-in-class companies are turning to technology to deliver on proactive strategies in two critical areas: working capital optimization and supply chain efficiency.
Optimize working capital to maximize profits and protect margins
The overall value of money and assets reduces in the future, and having cash sooner allows a business to quickly accomplish more. To mitigate this risk, companies must recognize the potential impact of various scenarios, ranging from rising prices on commodities to shortages of raw materials. This knowledge then needs to be translated into comprehensive and clear cash flow projections and flexible strategies that can be adjusted to manage liquidity shortfalls and surpluses effectively.
Finance leaders need to guide their business down the best-possible pathways. For example, they can choose to adjust receivables and payables strategies or tap the lowest-cost credit line available from their banking institution. Working capital assets can also be unlocked with financial tools such as dynamic discounting and supply chain financing.
While every decision boils down to the movement of cash, so visibility into real-time information is critical for businesses to make the best choices with confidence so that, as their values change over time, goods and assets can be purchased and maintained in the future at the original price with a carrying cost that’s less than the inflation rate.
Efficiently manage assets and materials across your supply chain
When the cost of manufacturing and distributing goods grow more expensive, businesses must decide on whether to reduce margins or pass additional costs to the customer. It is a tough choice, especially when people already feel financially overburdened.
To effectively manage inflationary risks again requires businesses to have access to the right data to make decisions and manage resources more strategically in ways that help increase productivity, decrease operating costs, and free up employees for more mission-critical work. Organizations need to get ahead of supply chain delays and downtimes to prevent revenue loss and avoid unforeseen costs with visibility into inventory and production capacity, asset maintenance, and logistics processes.
To learn more from industry experts about how to adapt your business processes to implement these strategies, click here to listen to experts discuss how to improve supply chain efficiency and optimize working capital for better profits and margins.
