5 Ways to Protect Your Business from Supply Chain Headaches
June 1, 2022
At a glance
- The main takeaway: International companies face particularly challenging supply chain delays, but there are many strategies available to help minimize the impact on your bottom line.
- Impact on your business: Failure to perform strategic financial, tax, and business planning could leave your company exposed to longer delays and greater losses.
- Next steps: Partner with a team of advisors who understands the nuances of international business and who can help you identify the right strategies and next steps.
The full story:
Two years after the COVID-19 pandemic triggered unprecedented supply chain delays, many companies continue to feel the effects. International companies might be some of the hardest hit as the challenges of navigating manufacturing and distribution across multiple borders only exacerbates the delays.
With supply chain issues expected to continue throughout 2022, business leaders need to find new strategies to protect both their business and their balance sheet. There’s no quick fix to cure all your supply chain woes, but these 5 strategies may help improve your bottom line.
1. Assess your costs
The ongoing supply chain issues, coupled with rapidly rising inflation, mean companies need to act fast to control costs. Some financial and business planning techniques can help mitigate the impact on your business, such as:
- Exploring new business strategies, such as vertical integration
- Renegotiating contracts with suppliers or buyers
- Identifying ways to pass rising costs to buyers
- Updating your pricing strategy
- Developing a sourcing strategy
- Performing advanced scenario modeling
2. Think bigger
To navigate these challenges, you need big, forward-thinking vision. One way to soften the blow when disaster strikes is to expand and diversify your business. An overly simplified business, such as total reliance on one supplier or distribution of only one product, will struggle to accomodate supply chain issues and will take a large hit on the bottom line. Look for ways you can expand your business, whether through new supply resourcing or new customer relationships.
3. Prioritize agility
Your supply chain should be designed to weather the worst-case scenarios, including the unknown, which requires a heightened need for flexibility in your business. An agile business will be better equipped to navigate unexpected challenges. Even if you had a well-developed contingency plan before the pandemic, it may be time for an upgrade. Don’t forget to think through all potential disruptions, from natural disasters to geopolitical conflict.
4. Embrace technology
Financial and business planning are nearly impossible without the ability to see, understand, and forecast trends in your business. Digital transformation and the adoption of technology, such as ERP systems, data analytics, and artificial intelligence, are invaluable tools for gaining the insights you need to create and implement improved supply chain strategies. However, technology can sometimes be a double-edged sword. Keep your ROI in mind and avoid investing in superfluous tools that risk breaking your budget.
5. Broaden the scope
While the ongoing supply chain issues are top of mind for many companies, there can be value in searching for solutions beyond the source of the problem. Some companies have found unexpected relief as they pursue environmental, social and governance (ESG) investments and improvements. For example, identifying new suppliers is an opportunity to invest in more sustainable and ethical resourcing while also diversifying your supply chain. As an added benefit, embracing ESG investment early can give businesses an advantage over the competition and attract new customers.
The bottom line
The supply chain issues triggered in 2020 are only becoming more complex as they persist. These ideas are a starting point to help protect your balance sheet, customer relationships, and profitability, but the depth of the challenges requires detailed financial, tax, and business planning best left to experienced professionals.
Aprio’s International Tax team includes accountants and advisors who understand supply chain issues and who can help you navigate the nuances of international tax law, accounting, and advisory services.
Schedule a consultation today to learn how our global insights can help ease your supply chain headaches.