Are luxury retailers exploiting workers? 👩‍🏠This week we look at managing cash flow during a crisis (you can probably recall a time this might've come in handy) and chat with a very special guest about what manufacturers can do to thrive today. In this issue of The Backorder:
- Italian police raids suppliers of luxury brands Dior and Armani
- Mark Flynn shares insights on surviving as a manufacturer in 2024
- 4 strategies for managing cash flow during a crisis
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In supply chain headlines
- Milan police raid results in worker exploitation accusations for Dior, Armani. Their luxury handbag units have been placed under judicial administration for one year. Prosecutors said that Dior paid $57 to produce bags sold for $2,780 in retail, according to The Economic Times.
- Q2 study reveals one-third of consumers have cut spending. Among other insights, Jungle Scout's Q2 Consumer Trends report found that inflation, homeownership, and the economy have influenced shopper behaviour in the last quarter.
- Researchers create dissolvable textiles from gelatine. Designers at the ATLAS Institute have developed a machine that can spin textile 'biofibres' from sustainably sourced materials, including gelatine and cotton and conductive yarns, explains The Engineer.
Ones and zeros are his heroes – meet Mark Flynn
We caught up with Mark Flynn, host of The Digital Manufacturer Podcast and Managing Director of Rubik – an award-winning IT business best known for helping manufacturers bridge the digital gap – to get his views on surviving and thriving as a modern manufacturer.
Times are tough. What’s your advice on managing cash flow?
"Get as much of your money upfront (as part of a deposit) or split your payments into predictable recurring payments. Ideally you want access to data on your cash-in/cash-out commitments and forecast different scenarios to effectively manage cash flow."
In your experience, what prevents manufacturers from growing?
"Not having a clear understanding of their buyer's journey and building a predictable sales pipeline. If you understand the factors that drive buying decisions and can turn that into a predictable, data-driven model, you can predictably scale all other parts of your business."
What are the main concerns for manufacturers you work with?
"The main concern is that they're going to be left behind by competitors who are more focused on building highly digital, highly automated, and data driven businesses. The landscape for manufacturers is getting increasingly complex. Those that don’t address these challenges by adopting digital tools will struggle. Those that do will thrive."
How to manage cash flow during a crisis
All options are on the table when it comes to maintaining sufficient cash flow. And during a crisis, every solution counts. Here are four ways to help ensure the lights stay on when cash flow is at risk.
1. Cull low-performing lines
Run a ruler down your product list with both gross profit margin and volume in mind. Which high-margin lines can you reliably stimulate demand on? Which high-volume deals will help you meet your costs? Whatever choices you make, a simplified catalogue of products can be easier to manage and require less capital outlay on stock when times are tough.
2. Model cash flow with professional tools
By the time cash flow constricts, it may be too late. If you’re serious about the future potential of your business – or simply want to get ahead of the next crunch – consider investing in professional cash flow modelling services.
3. Enforce payment terms digitally
Taking on new on-account businesses means taking on new risk. But you can still win new B2B contracts without going out on a limb. B2B sales portals, for example, let you accept new bulk deals based on advance payment only – helping you grow safely when times are tough.
4. Reset your min-max levels
Inventory is often the biggest drain on cash for businesses. It follows that any improvements you can make will have an outsized impact on cash flow. Using a tool like Advanced Inventory Manager is the quickest way to match inventory levels to your actual needs, releasing cash flow from your purchasing cycle.
On the lighter side
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