The 2:00 Minute Warning

For the past couple of weeks we have been addressing some important supply chain issues.

Two weeks ago, we talked about how the lack of bandwidth or internal resources within a company can hurt their supply chains. Last week we discussed the fact that since companies don’t compete, supply chains compete, shippers need to ask, “How competitive is my supply chain?”

This week we want to challenge you with this thought: How is your supply chain affecting your balance sheet? Practically speaking, an average or mediocre supply chain will have a negative impact on your balance sheet in ways that aren’t necessarily obvious.

I could give you all sorts of examples, but for now let me share some recent conversations I've had that highlight this balance sheet issue.

One shipper called us and was desperate because his company had too much inventory and needed more warehouse space. His company never mapped their supply chain or conducted a risk assessment analysis to identify the critical parts they need to avoid the kind of supply chain disruptions they experienced in 2021-2022. In managing their inventory, this company went from a “Just In Time” to a “Just In Case” approach and significantly boosted their safety stock to unprecedented levels to protect themselves. But this also meant that they needed a lot more space and incurred significantly higher inventory carrying costs.

Here's another exchange. After asking TranzAct to conduct a supply chain assessment, a shipper realized that by adopting straight forward EDI/API capabilities, they could improve their cash conversion cycle by 3 to 6 days. Overall, by getting their invoices out quicker, doing a better job of managing their 2/10 net 30 discount programs, and reducing their Accounts Receivable Days outstanding numbers, they could free up cash.

If your company already has a good or even great supply chain, congratulations, you don’t have to read any further. But if your company’s supply chain continues to be average or mediocre, then consider this question: What will it take to have your company invest in its supply chain capabilities by making it a higher priority within your organization?

Having read this some of you may be wondering: “Where do we start?” In many cases, it starts with bringing together your team, assessing meaningful and accurate data and developing insights to form a Supply Chain Plan with meaningful KPIs.

If you’d like to learn more about how to do that, what a risk assessment involves, or have any questions, then get in touch by giving us a call, sending us an email, or scheduling some time to discuss this with me via Calendy.