Today’s role of supply chain management is time, quality and cashflow focused. Every manufacturer and service provider is looking to streamline and tighten the product creation cost while retaining the level of quality. Every penny saved impacts the bottom-line.
As a small business (SME) currently participating in an ESD program, assess what you will bring to the table. How do you decrease the pain point of supply chain cashflow management?
Some suppliers are always willing to wait 120days before receipt of payment, are you in the position to carry the book for an extended period?
Have you investigated the sales and revenue collection cycle for your client? How else will you add value in the supply chain?
One of the greatest advantages to meeting compliance requirements is access to bid award or purchase order funds. We have a framework that supports awarded bids to small businesses, this support mechanism is provided to ensure that delivery takes place in good time and at a high output quality.
Small businesses are able to position themselves to take advantage of this financing system and thus increase their value in the supply chain.
Compliance is ‘king’ ; A compliant small business is always attractive to investors and partners in industry, overtime your reputation will create the foundation for more consistent quote requests and bid awards.
The challenge for the small business owner is managing the bid award funds in such a manner that post delivery the allotted maximum payment period is accounted for. This means allowing for 120days and still servicing the award fund cycle.
Cashflow management is a critical skill, create a framework that clearly unpacks every possible shortfall. The bid award funds are always proportionate to the total bid value but are never the full value of the bid itself. Keeping this in mind review the procurement guidelines and give careful consideration to the phased payment methodology of most public sector departments.
Some might ask, why would one award a bid to a business that cannot carry the cost of delivery. In South Africa, we are very fortunate that bids are awarded in line with the skill of the organization and not the bank reserves. This has allowed more small businesses to participate in large scale economic activity.
The bid award financing system also applies in private sector procurement. Get manufacturers quote requests in writing, approved quotes should be accepted with terms.
The terms of the approved quotes create the legal structure, that allows the financier to consider supporting the delivery of the order.
Always ask for a service level agreement with a supplier evaluation criteria. Credible supplier references are essential, the more directed the references on performance within timelines and quality the better the industry placement for future business.
