How to Free Up Cash for Your Coronavirus-Stricken Business
CORONAVIRUS = CASH PROBLEMS
Coronavirus presents cash problems for businesses everywhere. This morning MDM shared that the CEO of BlueLinx, a large building products distributor, voluntarily cut his monthly salary to $1, in response to the impact of Coronavirus on their bottom line. Revenue streams are thinning or drying up for a lot of folks, and businesses are taking extreme measures to protect their profit statement.
INVENTORY IS YOUR NUMBER-ONE ENEMY RIGHT NOW
Cash is king, and inventory is cash. LOTS of it. If you’re wondering how to free up cash and stabilize your business, inventory reduction is the number-one place to look. We’re living proof that this can be done without sacrificing much on customer experience.
Managing Coronavirus’ impact on your business — and the recession predicted to follow in its wake — is absolutely something that supply chain software can accomplish. Of course how much depends on your industry. But for most, now is the perfect time to look at using supply chain planning software to reduce inventory and reset service expectations.
SUPPLY CHAIN PLANNING IN A RECESSION
While Blue Ridge is typically used as a growth tool, in times like these it is a right-sizing tool. A system like this delivers the data science you need to quickly adjust service levels across all customers, all locations, all SKUs. You can quickly visualize the cost trade-offs associated with changes to inventory levels.
We have customers now that are seeing sales of janitorial and sanitation-related products up 1,000%, but core products are down 20%.
The fallout is on the delivery and supply side. Lots of cancelled orders for core goods, but many have been unable to fulfill some of the increased order for products that are spiking. In a situation like this, there are certain things you can do in Blue Ridge or possibly in your current planning solution to manipulate and gain control of this.
For example, features in Blue Ridge SCP, such as Temporary High Demand and Low “A” Stock Points, can be set to ensure that you are ordering high items, even if they are not due. Other features like Forecast Reductions on Low-Demand items (using Mass Maintenance) allow you to adapt the system and re-plan the forecast daily, depending on what’s going on with the larger picture.
MASSIVE CASH GAINS, WITHOUT SACRIFICING SERVICE
On average, distribution customers have used Blue Ridge Supply Chain Planning solutions to reduce inventory 10-20% while maintaining or even improving service levels up to 7%.
If you’re not sure how to do this, let’s talk. We’re happy to show how you can use supply chain planning solutions to free up cash at a time when protecting your bottom line has never been more critical.
That wraps up our Managing Coronavirus’ series. Why not go back and share it? Take me back to the beginning. More to come next week!