Today, all sorts of companies face supply chain challenges we couldn’t have imagined a few years ago, and these issues can create a real headache.
Across Arizona and especially in rural areas, supply chain disruptions continued to plague businesses into 2022, from construction to grocers to, yes, the pharmacies that stock aspirin to treat the pain. And at the start of the year, many retailers had inventory levels close to all-time lows, according to Federal Reserve Economic Data (FRED).
Planning ahead can ease the discomfort of supply chain management. Consider these five steps for your business:
1. Discuss your credit availability with your banker. Your banker can be a reliable sounding board for many business issues, including how you manage inventory and funding. Your relationship manager may be able to increase your line of credit to make it possible to purchase larger inventory at one time. Or they may adjust your advance rate to offer additional flexibility.
2. Reconsider your supply options. Supply chain issues did appear to ease in early 2022, although localized or industry-specific slowdowns continue to crop up. That’s especially true for states like Arizona, where regions that are distant from city centers may face added obstacles. We encourage you to consider the materials you require and assess whether alternatives can do the same job. If so, you may be able to find a different supplier or a more environmentally friendly solution that fills your need and even holds greater appeal for your customers.
3. Build new relationships. Chances are, you’ll find great variation in shipping fees and timelines, ports of arrival, delivery staffing and materials. Having a contingency plan can make all the difference. This principle is especially important if you have a small group of suppliers you rely on. Doing some outreach to divert a portion of your business to different suppliers can provide a welcome cushion.
4.Reconsider inventory standards. The past years have brought many changes to inventory practices. Has your business kept up? Having a backstock of excess inventory can help compensate for supply chain-related delays. You may wish to assess your business needs, trends and sales projections, as well as your credit limits and storage facilities, to create your plan.
5. Ensure payment strategies are up to date. Your money may be able to work harder for you — and ease the strain of supply chain problems. It’s smart to discuss your needs with your business banker regularly. On-target electronic and foreign exchange payment strategies might potentially help reduce payment-related supply chain delays.
To learn more about how your banker can assist you in flexing with the supply chain’s ups and downs, contact your Western Alliance Bank relationship manager or find out more about what our bank can offer businesses like yours.