Supply chain strength: helping you succeed in uncertain times

What trends are affecting manufacturers and producers?

And how can you keep your supply chain robust and effective, but also agile enough to deal with changing times and seize opportunities?

Disruption and uncertainty. They’re the two most common things your business has to deal with – especially in the wake of the pandemic. But it’s not all doom and gloom. Because change can be a good thing. And with the right approach to managing your supply chain, you can easily turn uncertainty into opportunity.

An uncertain future

From COVID-19 to Brexit, international trade wars and the current financial instability being felt around the world, the business landscape is growing more volatile by the day. On top of this, demanding customers, fluctuating currency rates and the growing trend for sustainable production practices are impacting manufacturer and producer businesses like yours at every level – particularly in the Finance team. As one Finance Manager in the packaging manufacturing industry says: “In a production business, we are very exposed to the commodities markets and the price of materials. Volatility is bad.”

Despite this uncertainty, there is significant opportunity. Manufacturer and producer businesses like yours are finding new ways to manage risk and keep operations profitable. You’re investing in technology to streamline processes, finding flexible new ways to manage supply chains and, critically, working with banks to ensure you spend and invest wisely.

What’s keeping you up at night?

In a recent survey, we talked to a number of mid-size and large businesses from all areas of the manufacturing industry. We wanted to find out what issues were impacting supply chain management and putting you under pressure. Chief among your concerns were:

  • COVID-19 – overcoming challenges created by the pandemic and adjusting your business to fit with the new normal.
  • Maintaining relationships – keeping suppliers happy, to help ensure your business has a steady supply of materials and services at the right price and quality.
  • Healthy balance sheets – making sure your business has a positive financial picture (especially when it comes to reassuring investors). This means maximising cash flow, which can lead to issues around paying suppliers and potentially upsetting your relationships with them.
  • Sustainability – implementing new equipment and processes to make sure your company operates with sustainable practices throughout the supply chain, plus investing in suppliers to help them change too.
  • Business confidence – knowing you can do business in places where you might not have established relationships, especially as the countries that offer significant supply chain potential might be on the other side of the world.
  • The global marketplace – dealing with different supply chains across the world adds more complexity – especially when dealing with complicated cross-border transactions, volatile currency rates, changing tariffs, employment concerns and fluctuating material costs.

With an international supply chain it is difficult to standardise payment terms globally. There are different market standards in different sectors and countries – from 30 to 120 days. We could push to minimise days payment outstanding (DPO), but then we end up paying higher prices to our suppliers as a trade-off. And that won’t lead to a great working relationship. We rely on good relationships with key suppliers.

Senior Procurement Officer, international corporate selling medical equipment.

With all of these concerns, it can feel hard just keeping the ship afloat, let alone charting the best course through uncertain times. So future planning and recommendations on how to develop the supply chain are often forgotten. However, there are some key ways you can strengthen your operations, improve supplier relationships, and make sure your business can plan for disruption.

Are you investing in the right technologies?

Investing in technology is a great way to strengthen your supply chain and improve your business. With shared systems in the cloud, you can collaborate with partners and get a better view of your entire end-to-end supply and production network. You get visibility into supplier inventory, production timelines and payment schedules. And you can easily see the price of raw materials, helping you buy at the right time and price. All of which means you can synchronise your operations, increase efficiency and ensure you remain profitable.

The more insight we have, the better – we look at benchmarking and forecasting materials pricing. This helps us model our financial performance and identify where we need to plan for risk.


What’s stopping you from being more agile?

You need to be as agile as possible, responding to changing circumstances quickly. This means understanding consumer demand – working with customers to gain real insights into buying patterns. Then you can work with suppliers to synchronise production planning, making sure you always have enough materials for production – but not stockpiling more than you need. Cash tied up in stock or materials is not working for you.

It also means being more flexible – able to change the shape of your supply and demand network. One way to do this is by forging alliances that help you share assets and facilities, rather than owning them outright. According to Dr Martin Christopher, Emeritus Professor of Marketing and Logistics at Cranfield School of Management, businesses should be “working with customers, suppliers and even competitors. It’s the only way to cope in a world that’s more unpredictable than ever.”

An effective way to keep your business cash rich is to delay your supplier payments for as long as possible. The longer you hold onto funds, the healthier your finances are. And it gives you extra flexibility to react to changing conditions. As one Group Treasurer at a global corporate in the construction industry told us: “Obtaining longer terms for supplier payment helps with how our balance sheet looks.” While this sounds like a negative for your suppliers, it doesn’t need to be. They can reference your confirmed orders as collateral for obtaining affordable credit.

Bank on disruption

Your business will always face some level of uncertainty. That’s just the nature of business. But it doesn’t have to be a bad thing. And while many organisations turn their focus internally – on areas like operations or procurement – they often forget one of the most powerful tools any business can have: banking.

Working with your bank, and taking advantage of their solutions and expertise, can be key to expanding into new markets, or increasing your revenue and market share. Your bank can give you greater insight into trade activity, helping you manage the risk of working with global trading partners. This can help you widen your supplier pool – ensuring better payment terms, favourable deals on materials, or creating opportunities to share resources.

A good relationship with your banking partner can also help you improve your working capital with cost-effective sources of funding. And you’ll benefit from more efficient transactions and better insights into your own accounts – helping you spend wisely and manage your supply chain more effectively. All of which means you can feel more confident and find the opportunity in any uncertainty.

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