It’s tough out there. Competition is fierce and squeezing every last drop of margin into prices that can hold their own against the rest of their market has never been more commercially critical.
When you’ve stripped out waste and optimised resources, what do you do next to keep pricing competitive without sacrificing profit?
The simple answer is to challenge your supply chain. Research carried out by the Chartered Institute of Procurement and Supply (CIPS) reveals that companies spend as much as two thirds of their revenue on goods and services. It makes sense, therefore, for businesses that rely heavily on materials from external suppliers to examine whether their supply chain could help them manage their overheads.
Helping customers to build cost management into their supply chain strategy while maintaining quality is something we have built into our global operations at Sika. We understand that lead times and short supply chains are critical to our customers’ success, so investment in growing production capabilities in specific locations is vital.
This starts with sourcing of raw materials. While some materials can only be acquired by importing, we work as closely as possible with suppliers by building relationships with operational management teams to reduce lead time, costs, risk and transportation. As a result, we can manage manufacturing schedules based on product demand, ensuring consistent and reliable availability.
It’s a task that Sika is tackling globally. For example, following Indonesia Cement Association figures estimating total cement consumption at 64 million tonnes in the Indonesian market, we opened another plant in Surabaya, East Java, to help keep up with demand for major development in infrastructure, industrial, commercial and housing projects across the country.
It’s all part of our approach to ensuring that the supply chain is more joined up and effective to deliver better outcomes both for the built environment and for our upstream and downstream delivery chain partners. Sika’s commitment to lean management and the operational improvements we have made as a result not only benefit our own efficiency and profitability but also enable us to align our purchasing, manufacturing and logistics strategies more effectively to our customers’ requirements to pass benefits on to them too.
Market conditions are constantly changing and that calls for long-term thinking combined with an ability to act quickly. Suppliers, like Sika, with an agile business structure and a clear focus on working for the benefit of their customers rather than simply for short term profit can help to support a thriving delivery chain at every level.