Optimising Operational Effectiveness

Can supply chain effectiveness relieve margin pressure?

Feeling pressure on margins and performance?

The last few years have perhaps seen more disruption and pressure on supply chains than ever before.  The uncertainty around US tariffs is just the latest in a long line – the Covid–19 pandemic, the Russia Ukraine war and the current situation in the Middle East to name but a few, impacting  lead–times and increasing uncertainty over how long it will take for supplies to arrive, assuming they will at all.  The consequent increases in energy and raw material costs plus the threatened hike in oil prices only serve to make the challenge greater.

All of these have significantly squeezed margins. Added to these global pressures, domestically induced changes, including the recent hike in employer NI contributions, leave many businesses struggling to maintain profitability.  Worse yet some are being forced to contemplate reducing cost by lowering quality or taking even riskier routes.

Selling your way out is tricky in a static or slow-growth economy, especially where there is limited differentiation or ill-defined value proposition, where everyone is fighting to maintain market share.  Similarly, raising prices to offset increased costs is unlikely to be an option.  So how else to respond?

Could operations and supply chain performance provide some relief?

Simply put, most organisations have huge potential to improve their internal and external supply chain performance yet may not be able to see it or make it happen.

That’s where the perspective of an experienced external adviser can really add value.  We help SME manufacturing and engineering businesses make immediate profit margin and cash margin gains from their supply chain, at the same time improving service levels and responsiveness.  By embedding continuous improvement in day–to–day practice, we also enable future additional supply chain gains.

Taking a “whole system” view we ensure that all of the various elements align to deliver the optimum performance at the minimum effort and cost – what I refer to as “high performance with ease”.

Why this approach works so well for you

Once you create an overall operations/ supply chain system that both anticipates and responds more effectively to changes in the business environment, you will see the following benefits:

  • Actual margin increases with same (or better) customer service

  • Improved cash flow from optimised inventory profile

  • Increased competitiveness and improved customer satisfaction, delivering a stronger value proposition that gives potential for volume growth or price increases

  • Ongoing gains in margin, service level and quality that compound through the whole system by embedding continuous improvement as part of daily life

  • More capable employees who have gained knowledge and skills and, more importantly, who feel better versions of themselves and even more appreciated for the extra value they contribute

All of which delivers an end–to–end supply chain that is more responsive to market conditions at reduced cost, leaving you more competitive in an increasingly dynamic business environment.

How Veracity makes this work

We believe that every client’s situation is different and requires a bespoke response, albeit one that uses well–proven principles.  Before beginning any work, we’ll spend time with you – at no cost to you – to really understand your business issues and determine what you need from our support (for more detail on this process, click here). 

Typically, we’ll start with an assessment of your current end–to–end supply chain to consider issues such as:

  • Impact of external supply chain on internal operations

  • Identifying mis–alignment between areas causing impact elsewhere that increase cost and reduce margin

  • Surfacing opportunities to improve margin and how to prioritise them for maximum margin gain

Once clear where improvement is required, we may work on areas such as

  • Optimising inventory to match demand while releasing capital

  • Upskilling your workforce with the knowledge and skill to thrive in this changing environment

  • Creating an operating model that engages your wider team more fully to maximise the potential for opportunities and alignment through the end–to–end supply chain

Ready to explore further?

If you’re interested in exploring how this approach could help you to improve your supply chain and operational performance, the first step is a free, no obligation call to explore your current business situation and identify specific ways in which we might help. Just click the button below to bookm a free, no obligation call or fill in our contact form and we’ll be in touch.

A client has recently had a major success using this “whole system” approach.  They had previously outsourced the manufacture of a major sub–assembly of a high–volume product to an Asian supplier to reduce purchase cost. However, with the disruptions in global supply logistics in recent years, lead–times had extended and deliveries were less certain, leading to increases in stockholding, cost and effort to maintain supply.

By undertaking a total cost of acquisition analysis, they determined that they could not only bring manufacturing back to a trusted UK supplier without increasing costs, but there was actually potential to reduce costs by local sourcing and dramatically lower the level of inventory required, with the possibility of further improvements in future.

Want to learn more?

For more information on how to achieve “high perfromance with ease”, check out the following articles:

or download our introductory “High Performance Foundations” presentation