The supply chain: It’s gripped headlines over the last couple of years. Today, it seems, everyone from local business owners and franchisees to home builders, dentists and lawyers has new knowledge of shipping and delivery issues.
Southern Nevada’s supply chain is intricate, involving climate control and ventilation, gaming equipment, construction materials, technology and groceries — all essential elements to keep our economy moving. Yet, at the start of 2022, many inventory levels were close to all-time lows, according to Federal Reserve Economic Data (FRED).
Fortunately, you can think ahead when it comes to supply chain management. Your business might consider taking these five steps to be prepared for future supply-chain ebbs and flows:
1. Update your payment strategies. Your business banker should be available to talk with you about your current cash management and credit needs. Making your money work harder for you can remove some of the strain of supply chain problems. For payments across Nevada or across the globe, having appropriate electronic and foreign exchange payment strategies might speed payments and ease unnecessary delays.
2. Tally your inventory standards for today. For years, common wisdom has advised business owners to calculate inventory based on inventory turnover ratio and similar factors. While those calculations are still valuable, backstock matters today. This excess inventory can help compensate for supply chain-related delays. Calculating needed inventory is an individual art, based on your business’s storage and credit limits, needs, trends and sales projections.
3. Consult with your banker about credit availability. Inventory and funding often go hand in hand. Your banker can help introduce the two. For example, you may qualify for a larger line of credit that will enable larger inventory purchases. Or your relationship manager may be able to offer a higher advance rate for added flexibility.
4.Examine varied supply options. In Nevada, we’ve seen the need for new supply chain solutions firsthand. Realizing 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. Similarly, we encourage you to consider the routes your supplies take to get to you. Can alternatives do the same job or give you more options?
5. Diversify supplier relationships. Ports of arrival, shipping fees and timelines, staffing and materials rise and fall based on location, product and supplier. Working with different suppliers can help you stay flexible and provide a welcome cushion for any hiccups in the supply chain process.
To learn more about how your banker can assist you in flexing with the supply chain’s ups and downs, contact your Bank of Nevada relationship manager or find out more about what our bank can offer businesses like yours.