It is disappointing – but not unusual—when a customer fails to pay an invoice that eventually goes into collections, or even files bankruptcy. This is a known risk, but many businesses stop worrying it about it past their accounts receivable department. However, if you are looking for one of the best ways to determine the health of the state of manufacturing, you only need to pay attention to your retailers to figure it out.
Paying attention to the retailer is a version of supply chain management that goes beyond placing orders and warehousing parts. In reality, knowing the retailer can tip off other factors about the current economy. For example, General Motors was caught entirely by surprise last year when their only supplier of certain acoustic damping materials went bankrupt, effectively halting their production in North America. Retailer Sears Payless owed some $240 million to its creditors when the bankruptcy was filed. Knowing the retailer’s financial health could be considered a first line of defense. Automating your days-sales-outstanding will help identify spikes in the numbers that can indicate financial distress as well.
Being clued into your retailers’ fiscal health, though, is only one side of the coin. The other side is to manage your production efforts in such a way as to minimize costs and energy loss. Reevaluating the health of your inline steam heater or mixer, for example, can save a lot of money both in the short and the long term and make you less vulnerable to changes in your supply chain or retailer.
As a business, our exposure to the problems retailers have can seem like it’s not our issue. But their experiences can often mean serious problems ahead for us as well. Working with a partner like Komax can help you to determine where your risks are, what opportunities you can take advantage of and how to upgrade your equipment processes so as to take the most advantage of your situation, no matter how manufacturing overall is doing. Contact us today to find out how.