The increasing role of treasury in supply-chain management

  • Businesses following a “just-in-time” approach are adding a 34% buffer to ensure supplies do not dry up by moving to a “just-in-case” one. Although a larger asset base may sound like a good thing, higher stocks mean not only additional rent for more storage space, but also more capital getting stuck in unproductive goods.
  • It now takes almost double the time (in number of days) for cargo ships to reach North America or Europe from Asia, according to Flexport research. With US demand topping pre-pandemic levels, the twin ports of Los Angeles and Long Beach, where almost 40% of the nation’s imports are unloaded, are suffering from overloading, and ships have to wait for weeks before they are allowed to dock and discharge payloads.
  • “Out-of-stock” items were estimated at USD1.14tn in 2020, against USD626bn worth of overstocked items due to the pandemic. Another need of the hour is to understand demand and plan production in a way that scarce inputs are utilised in the most prudent manner. Companies are investing in market research and using big data to make better predictions of demand and detect fraud.
  • Twenty-four percent of small business owners still use accounting software such as QuickBooks for inventory management, while 67.4% of supply-chain managers use Excel spreadsheets as a management tool. With supply-chain disruptions impacting sales, more businesses are likely to accelerate adoption of digital technologies for better management and monitoring. A cloud-based digital B2B network and SCM platform could help gather customer feedback promptly, mobilise command centres in a timely manner, reprioritise, support decisions such as on whether to make or buy and manage contingencies.

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/