Improvement in the cash flow of a business occurs primarily due to any change in the efficiency of the supply chain management of the company.
Hence, streamlining the supply chain of a business is among the primary measures any business owner needs to take in order to increase the business cash flow.
Proper measures to take to improve business cash flow
As a business owner, you should be aware of several business ideals like supply chain management (SCM), value chain analysis, inventory management, invoice finance, channel finance, etc., which would help in streamlining the management process and increase business efficiency.
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Supply chain management
An efficient supply chain management is the key to success for any manufacturing business. However, at first, you need to be aware of what supply chain is before understanding the management system surrounding it.
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What is the supply chain?
The supply chain is a series of stages that a business operation follows to deliver a product or a service to the customer. For example, this sequence of steps initiates for a manufacturing company receiving raw materials from the vendors and terminates on the successful delivery of the finished products to the end-user.
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What does supply chain management indicate?
The suppliers, retailers, storage channels, transportation mediums, dealers, etc. are all a part of the supply chain of a business. The supply chain management, also referred to as supply chain process, in the administrative tool adopted by enterprises to streamline each segment of the workflow channels.
Every organisation should implement an efficient supply chain management system to streamline the manufacturing process, which will not only lead to substantial growth in revenue but also play a major role in improving the company business cash flow.
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Value chain analysis
Another important method by which business owners can improve the overall business cash flow is by conducting a value chain analysis.
It can be denoted as a process with the help of which enterprises can analyse minor alterations made in the beginning stages of a service or the manufacturing process of a product.
This process has a major role in determining the correct valuation of the finished product with the help of the data obtained from the said analysis.
Organisations perform multiple value chain analysis by evaluating each segment of the supply chain of the company; this is done so that various methods are identified which can improve the company business cash flow as a whole.
In order to conduct a value chain analysis, you need to be aware of its two primary components, which are primary activities and support activities.
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What are the primary activities of a value chain analysis?
The primary activities of a value chain analysis usually consist of the following segments –
- Inbound logistics.
- Outbound logistics.
- Business operations.
- Marketing and sales.
- Customer service.
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What are the support activities needed for value chain analysis?
The support activities include various components which have the potential to enhance the primary activities of a value chain analysis.
These activities generally comprise the following segments –
- Technological development.
- Human resources and management.
- Company infrastructure.
Hence, with the help of value chain analysis, organisations can streamline their supply chain further; this, in turn, facilitates substantial return from a comparatively lower working capital.
An efficient SCM and value chain analysis may point to a lack of adept machinery, which can improve your workflow extensively. If you do not have the adequate funds to purchase the same, you can always opt for an equipment loan and watch your cash flow improve in short notice.
As an entrepreneur, you can also apply for a business loan to expand your firm or increase the overall working capital. Reputed NBFCs such as Bajaj Finserv provide such loans with attractive terms and conditions.
The company also brings pre-approved offers that help in availing loans with ease. Such offers are also available on numerous other financial products such as personal loans, business loans, etc.
Hence, from the above discussion, you can understand how implementing an efficient supply chain management systems and performing value chain analysis will help to improve the cash flow of your business. It can also remove any bottlenecks in your operations.