A critical part of a manufactur er’s success — and one which is sometimes overlooked — lies in its supplier relationships. Regardless of what a supplier provides — equipment, raw mate rials, packaging or finance — these relationships must be effectively managed.
Just like any other supplier, your financier should provide you with surety of supply, a qual ity product and flexibility. Without those elements, it’s sim ply too risky to play in such a working capital- and technology- intensive industry.
So how can you best work with your financier to not just over come the current challenges, but strongly position yourself for the coming years? Some areas you should consider are:
Communicate with your finan cier –Keep your financier abreast of what’s going on in your business — both good and bad. Financiers are usually will ing to work with you through the tough times — but don’t surprise them with bad news. The out comes are infinitely better when your bank or financier knows exactly what’s going on, the rea sons for it and how you can work together to overcome any chal lenges.
Plan, plan, plan –If you’re one of those organisations who has never planned before, now is an excellent time to start. Smart manufacturers have vision and a detailed view of what they want to achieve not just in the next one to three years, but in the next ten. Manufacturing is a cap ital-intensive game requiring a lot of long-term investment. If your business plan doesn’t reflect that, you’re limiting your chances of success.
So, sit down and put together a detailed plan which clearly sets out who you are, what you’re planning on doing and how you’re going to get there. Your financier will thank you for it because it will give them a bet ter understanding of your busi ness, and you’ll feel better know ing exactly what you’re aiming for.
It’s not just about price –A savvy manufacturer will con stantly look at ways to reduce costs, but don’t fall into the trap of thinking this is a panacea for you or your financier. Believe it or not, we care about more than just the expense side of budgets. Everyone’s doing it tougher at the moment on the back of a challenging economy and ever- increasing competition from Asia. Price is important to cus tomers, however successful busi nesses have the ability to identi fy and articulate their real value proposition and point of differ ence, and then ensure that they rigorously execute.
In the same vein, the cheapest finance is not always the best and, like any supplier, a finan cier should be constantly reviewed to ensure you are get ting exactly what your business needs.
* Peter Nicholson is Executive Director, Corporate FinancialServices, GE Capital.