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Optimizing the Corporate Supply Chain with PO Funding Arrangements

Posted on October 29, 2013 in Purchase Order Finance

Managing and optimizing modern supply chains can help companies achieve higher profitability and enjoy an increased competitive edge within their industry. Supply chain management strategies are currently a hot topic for discussion in the business world. Bloomberg BusinessWeek, for example, ran an article on August 21, 2013, regarding automaker BMW's spectacular supply chain meltdown and its struggles to deliver spare parts as a result of this failure of management. BMW's recent adoption of a new logistics and supply chain management system has had catastrophic effects on its ability to supply spare parts to dealers and certified repair shops around the world.

Optimal Supply Chain Arrangements Boost Productivity

In almost every industry, finding the most cost-efficient and reliable sources for necessary supplies can keep operations on an even keel and can ensure maximum productivity and profitability in the production environment. The cheapest supplier may not always be the best vendor for the job; higher quality materials, more reliable delivery times and consistency may be more important factors than price for some industries and companies. Finding the most cost-effective and workable supply chain solutions, however, is a definite plus for companies throughout the industrial marketplace.

Distribution Channels Can Impact Profitability

Identifying and developing lasting relationships with the right distribution companies can help manufacturing concerns ensure that their products arrive at retail shelves on time and in top condition. Shipping companies may offer direct delivery services or may use centralized warehouses and last-mile shipping arrangements to streamline the distribution process. Less-than-truckload shipping and truckload freight arrangements may also be incorporated as part of the distribution chain for manufacturers and import/export resellers. Optimizing this distribution system for cost and effectiveness can be just as important for corporate profitability as the vendor relationships established at the beginning of the supply chain.

Fine-Tuning Supply Chain Changes

BMW's recent foray into supply chain optimization holds important lessons for others considering similar moves. BMW contracted with IBM to create a workable supply chain system. The software package delivered by IBM and implemented by BMW failed to incorporate some important elements of the overall supply chain already in place. The majority of problems arose due to incorrect parameters in the software implementation. These issues primarily affected the Dingolfing factory, which is primarily responsible for producing BMW replacement parts for the retail and repair marketplace throughout the world. Efforts are continuing to get the production of these parts and distribution efforts back on track for the beleaguered automaker.

Funding Optimization Efforts

For smaller companies, finding the right funding solutions to manage ongoing supply chain optimization efforts can be a challenging task. The business credit marketplace has not yet recovered from recent economic downturns, making it harder for small companies to obtain the credit arrangements they need to succeed in the competitive arena. Purchase order loans can often provide a viable solution for taking advantage of short-term opportunities from vendors and suppliers; by collateralizing these financial agreements, companies can often obtain the cash necessary to create new and beneficial supply chain arrangements to optimize their profitability.

1st Commercial Credit can help with advanced PO funding solutions that allow companies to monetize more of their available financial assets. The lending experts at 1st Commercial Credit can typically return a decision within one business day after all documentation has been received in their offices. Disbursements are quick as well, allowing small businesses to manage their supply chain requirements in a fast and proactive way.