Unless you’ve been living under a rock for the past year you might have noticed that things are a bit more expensive, of late.
In fact, in the U.K. inflation has soared to 11.1% in October. Inflation is a major concern for manufacturers. As the cost of goods continues to rise, manufacturers need to find ways to manage their costs and make sure that they’re getting the best value for their money.
The buying process and eSourcing solutions are crucial in achieving this goal — especially as it relates to currency fluctuations and supplier reviews.
Let’s dive into all things inflation, supply chain, and sourcing technology.
What Is Inflation?
Inflation is when the cost of goods and services in an economy increases over time. When prices rise, the pound in your pocket buys fewer goods and services.
This means that when you exchange the pound is worth less when you exchange it.
Inflation can be caused by a variety of factors. These include increases in the money supply, changes in government policies and taxes, and supply and demand imbalances in the economy.
It is generally measured using statistics such as the consumer price index (CPI). This measures the percentage change in the price of a basket of consumer goods and services.
Central banks, such as the Bank of England in the U.K, use a variety of tools to try to maintain low, stable levels of inflation, as high or volatile inflation can have negative effects on an economy.
Supplier Reviews Are Key
Supplier reviews are important for quality control. But they can also help identify new opportunities, products, and suppliers. This ensures you always have the best deal.
And being able to change out your suppliers easily is crucial during inflation as some suppliers raise their prices or lower their quality.
Supplier reviews provide a lot of value to manufacturers and businesses in the form of insight into how their suppliers operate. By taking the time to conduct regular internal audits, manufacturers can ensure that their business partners are meeting their commitments.
This is especially important when dealing with new suppliers or working with existing ones on projects that require new processes or technologies.
Reviews also provide another view into how well you’re managing your supply chain, which is something that all companies should strive to do to increase efficiency and reduce costs.
Currency Fluctuations Need to Be Managed
In dealing with the impact of inflation, it’s important to understand that your currency needs extra attention. Currency fluctuations and exchange rates can have a big impact on your business and its profits.
To keep up with inflation and avoid any losses there are several things you should do.
First, get a handle on how much money you’re spending on imported goods. This will allow you to assess how much of an impact inflation is having on your business specifically.
If some items are more expensive than others, then it’s more important for them to be included in any measures taken by the company as part of its plan against inflation.
Secondly, monitor international exchange rates. Look for currencies used by suppliers or customers who don’t accept payment in local currency (such as dollars). Then adjust prices accordingly if necessary.
This is that you remain competitive in terms of value for customers without losing out on profit margins due to increased costs from importing materials.
The Buying Process Needs to Change
To be successful in this new environment, buyers will need to be more proactive and involved in the buying process. They also need to become more aware of the price of goods.
As well as how they impact the bottom line. Buyers will also have to pay close attention to supplier quality and how it affects supply chain management.
In short, buyers must learn how to make decisions that are both data-driven and cost-effective at the same time.
You may need to hire some new buyers, give pay rises and training to your existing buying team, or even fire and replace some of them.
eSourcing Solutions Can Help
eSourcing solutions can help you find the best deals. eSourcing solutions such as Delta eSourcing are software that helps buyers manage supplier relationships, keep track of the buying process, and analyse spending analytics.
They also provide a platform for buyers to access an array of information about what products are available on the market or in-house inventory at the click of a button.
eSourcing solutions can put your business on track to avoid taking a big hit thanks to inflation.
Spend Analytics Need to Be Used More Widely
Spend analytics are the best way to understand the cost of goods sold, labour, materials, and transportation. They can also help you calculate overhead costs.
Costs add up quickly, but if you’re not tracking them and analysing them for trends in your industry then you won’t be able to respond appropriately when it comes time to negotiate with suppliers or buy new equipment.
There Are Many Benefits to Implementing E Sourcing Solutions
Companies that implement e sourcing systems can manage their spending, reduce costs, and improve margins. Supplier relationships can be managed more effectively, which leads to better service and a reduction in the number of suppliers needed.
The supply chain is improved by allowing companies to better plan purchases. Finally, inventory management is streamlined by allowing companies to not only forecast demand but also track products throughout their lifecycle using data analytics software.
If you’re interested in learning more about how Delta eSourcing can help you be sure to contact us.