Argosy Private Equity and its portfolio company management teams often utilize the knowledge and services of industry experts and consultants as we implement Argosy’s VAM™ (Value Acceleration Methodology) within our portfolio companies. Argosy has partnered with Beckway, a private equity operating company specializing in improving the value of privately held businesses, to provide procurement support to Argosy and several of our portfolio companies. Our latest blog on Finding Opportunity Within Supply Chain Disruption comes courtesy of John Bradshaw, Senior Partner at Beckway.

Lead-time concerns, lack of availability, inflationary market spirals – no one likes supply chain issues. But these negative situations often give businesses a chance to evaluate and optimize strategy and operations to realize faster speed to savings and greater value creation. Recasting these supply chain challenges as opportunities will help you see the light at the end of the proverbial tunnel.

Building a resilient supply chain starts with procurement, the strategic sourcing and acquiring of the goods, services, and materials your company needs to operate successfully. This includes identifying suppliers, negotiating costs, and determining product quality and specifications. Procurement intersects with almost every functional area of an organization – sales, legal, operations – and is intimately tied to supply chain management.

Once procurement has vetted and contracted with suppliers and purchased the goods and raw materials you need to run your business operations, it is the responsibility of supply chain management to transform these goods into finished products and deliver them to customers as efficiently as possible.

So, what happens when a link in the supply chain breaks? Use these disruptions as opportunities to leverage internal and external resources to uncover savings and find better ways to produce, store and distribute your products, making it a win/win for your business.

Here are seven actionable steps to combat supply chain disruptions, optimize performance and drive growth:

1. Collaborate with suppliers. Cultivate relationships and communicate with existing suppliers to learn how they can support your research and development efforts and streamline flow. Supplier involvement creates stronger ties and accountability among all supply chain members and drives innovation, continuous improvement, and cost reduction.
2. Have a backup plan. Let us face it – there will be circumstances when suppliers cannot meet your needs. Be prepared with a list of pre-vetted backup suppliers. Not only will this generate competition among existing suppliers who will work hard to keep your business, but it will help you stay agile and ready to pivot and adapt, as necessary.
3. Give customers what they want. Use the voice of customer (VoC) market research techniques to identify, organize and understand the priorities and perceptions of your customers. Survey customers’ needs and prioritize your supply chain around the products that deliver the biggest value based on consumer demand.
4. Work with what you have. Promote and sell in-stock inventory. Focusing your marketing and sales efforts on what is in the warehouse will help bridge the gap until the supply chain issue is resolved, what is on back order or out of stock can be replenished, or a new product can be developed. Knowing which products deliver the most margin to the bottom line is valuable, so you can prioritize what keeps the business going over something high volume with minimal margin contribution. Sometimes, having inventory in the pipeline or on-site is a good thing for service levels. The inventory can be a buffer in case you change suppliers or in case of product obsolescence. Consider negotiating vendor-managed/owned inventory or negotiating longer payment terms.
5. Consider tradeoffs. Do not be afraid to look for alternative solutions for cost, quality, and supply issues. Ask questions like, “What other materials or processes can be used to make our product?” Often, this leads to larger discussions, unearths lower-cost, viable alternatives and accelerates speed to savings.
6. Organize your approach. Conduct value engineering, implement critical process parameters, and analyze the total cost of ownership (TCO). Measure the value and effectiveness of products and processes to improve productivity and optimize performance. These systematic methods will help you spot paths to cost reduction without sacrificing functionality.
7. Form a tiger team. Internal communication is key. Stakeholders from procurement, research & development (R&D), engineering, sales, and marketing must form a cohesive, cross-functional team to identify and prioritize actions to help offset the issue in the short term and find opportunities for permanent solutions to future-proof your supply chain.

Takeaway

Supply chain woes can occur due to any number of issues, among them material shortages, shipping costs and delays, and market turmoil. Consider these disruptions as opportunities to ask questions, collaborate with your internal team, reevaluate existing goods and services, and contemplate new ways to innovate and improve. In doing so, you will realize even greater savings and efficiency.

Questions? Connect with us to learn how we help businesses like yours think outside the box and uncover supply chain savings and solutions.

Partner Highlight

At Beckway, we are operators, not consultants. Our team of Trailblazers does not just identify the problem and leave you to fix it. We are hands-on and improvement-focused, executing holistic solutions that make your business stronger, more resilient, and future-ready. Want to learn more? Contact John Bradshaw (Jbradshaw@Beckway.com).