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May 12

Mobility Solutions: Lower Purchase Costs

recession street

The “Great Recession,” as it’s now called, has certainly hit every company pretty hard. Demand is down, fuel costs are up and uncertainty abounds. Supply chain professionals understand that today’s fuel surcharges are just part of the day-to-day hassles of managing incoming shipments. Higher freight impacts gross profit margins, and companies are often forced to absorb the losses. However, procurement professionals aren’t just burdened by higher freight; inventory financing is also steadily increasing, this despite today’s historically low interest rates. Unfortunately, if customers take too long to pay their invoices, then a company’s financing costs will increase, no matter how low interest rates are. So, with freight on the rise, and financing steadily increasing, what must your company do to reduce its inventory and supply chain costs?

The answer to that aforementioned question isn’t predicated on some unique strategy. It isn’t based on using economies of scale, or cutting back on order volumes. Instead, success is dependant upon your company’s ability to respond to an ever-changing market dynamic, one where your purchasing department isn’t held back by manual processes, but is instead empowered by the speed of its enterprise mobility network. After all, it’s not just customers that are mobile; your vendors are mobile as well. The question your company must answer is the following: Will it be business as usual, or will you set the stage for a lower cost structure by upgrading your manual processes with enterprise mobility solutions?

Take Charge During a Recession!

When you think about a recession, what’s the first thought that comes to mind? Well, you’ll likely think about lower gross profit margins, lower sales volumes and lower customer demand. Profit margins are often razor thin, which in turn forces you to concentrate on long-term cost reductions. Therefore, it’s natural that your focus should immediately turn to lowering your supply chain costs. Unfortunately, most companies fail in their pursuit of securing lower inventory costs. Why do they fail? Simply put, it’s because they lack the ability to manage their vendors in real-time. Instead of being connected with vendors with rugged handheld computers and mobility devices, they are held back by cumbersome, outdated and antiquated manual processes. It’s these manual processes that inhibit the purchasing department’s ability to lower costs. They are forced to manage vendors with inaccurate data, thereby making any efforts at reducing costs extremely difficult, if not, downright impossible.

Unfortunately, far too many companies ignore the high costs of managing inventory with manual processes. This is largely because they have a hard time quantifying the costs of data and key entry errors. More importantly, they fail to recognize that the success of their entire operations is predicated on the accuracy of their manual processes. Sales provide an inaccurate forecast, and the effects reverberate throughout the entire company until the purchasing department is left with inaccurate data. Bottom line, while recessions may be difficult to navigate, they are still fantastic opportunities to reduce your cost structure. However, success is ultimately dependant upon the speed of your response. Manual processes won’t cut it, but a well structured enterprise mobility network will.

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