supply chain debate SPONSORED BY
greasing the wheels Why funding the supply chain is crucial to maintaining trading momentum. As many small businesses struggle to get the finance to fulfil big orders, how can these problems be overcome?
TAKING PART David Arthur, partner, Tait Walker Simon Barker, chief technical officer, Radfan Craig Iley, regional director, North East and Cumbria, Santander Darren Race, chairman, South Durtham Engineering and Manufacturing Forum and Business Network and md e4 Learning Solutions Phil Todd, personal business advisor, Intraining Richard Turner, vice president global manufacturing, Technip Umbilical Systems Michael Vassallo, investment executive, FW Capital
Mark Easton: “Let’s start with Simon. How would you describe the challenge of the supply chain and the problems you were facing?’’ Simon Barker: Described the difficulty for Radfan in launching a new product which didn’t have any existing markets and so little idea of the initial demand. When they launched they sold 750 units in four days in March which exhausted their stocks. “The best we could do was stick up an out of stock value list and just get people to sign up and be patient and wait 17 weeks for us to get more stock in.’’ Mark Easton: “How many suppliers are you dealing with?’’ Simon Barker: “We manufacture it ourselves but we work with eight suppliers. Fortunately we only have the one overseas supplier. That makes it a lot easier because that’s the only really long lead time we have. For everything else we get parts within three or four days of when we need them. That’s how we dealt with it, to have one long lead time supplier and have everything else as close as we can.’’ Mark Easton: “Phil, what are the dos and don’ts of trying to set up an effective supply chain.’’ Phil Todd: Said companies should be aware of what support is available. Intraining would happily work alongside a company to develop a business plan and help identify the most suitable out of several organisations
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that could help with a product launch. Craig Iley: Agreed that banks should be considered a key component of the supply chain. “I would advocate the kind of relationship with your bank that you have with, for example, your two key customers or your two key suppliers. They provide something that is essential to your business. But, do you know enough about your bank and what they can offer? How many people do you know in that business? How much do you know about their business model? From Santander’s point of view, we are very interested to have those discussions and to understand your business and to tell you about our business and the things that we can do.’’ Mark Easton: “What can you do? A lot of it will be about cash flow.’’ Craig Iley: Described a Santander product called Supplier Payments which can offer a way of funding the supply chain which could be cheaper and more effective than methods such as invoice discounting or factoring. David Arthur: “It’s all about communication. It doesn’t matter where you are in the supply chain it’s about making sure you link up the customer payment profile right down the supply chain profile, making sure you’ve got your timing right. It’s all about planning, being ahead of the game and looking at what’s on the horizon, making sure you have flexibility in your cash flow and going out there and getting money when you don’t need it. If you leave it too late and go when you are desperate for money you won’t get it. The supply chain then falls down. Clearly the financiers are worried about overtrading situations when smaller suppliers get large orders but there are more and more products out there which are often specific to certain industries and sectors and you have to go and get the right advice to match the funding with what you want. Make sure you get the right advice on things like R&D tax credits and get your tax planning and tax structures right.” Mark Easton: “Michael, as a venture