What Is Supply Chain Management?

Supply chain management is the process of delivering a product from raw materials to the consumer. It includes supply planning, product planning, demand planning, sales, and other operations of planning and supply management.

Why Supply Chain Management is Important

The positive or negative impact on the supply chain is felt throughout the business. There are two main areas of impact: customer satisfaction and return on investment.

A satisfied customer is equal to a profitable business and also means higher productivity.

If a customer is happy with the way the return was handled, they are 70 percent more likely to be a repeat customer.

A smooth return process means an efficient supply chain that is well-connected and involves interaction throughout the entire supply chain. When the supply chain meets or exceeds customer expectations, it is due to efficiency. The entire business benefits from higher rates, positive customer sentiment, and lower service costs for the business.

Higher Productivity in The Supply Chain

Higher productivity is measured in terms of the efficiency of all processes of delivering goods and services along the supply chain.

Improving supply chain efficiency can put pressure on the team and its capabilities, as costs and budgets remain flat or cut when they are expected to move the same or more products at the same or higher quality levels.

The increase in profit for the business is measured using indicators such as working capital turnover or cash conversion. As the business improves, the result is profitable cash management and income transformation. Flattening the cost curve is often a challenge if two factors are not considered: new capabilities (process and data) that enable faster, better decision-making; and the use of a tool that scales profitably based on the value it brings to the business.

What is the Supply Chain Management Process?

The supply chain management process consists of four main parts: demand management, supply chain management, S&OP, and product portfolio management.

1. Demand management

Demand management has three parts: demand planning, product planning, and trade promotion planning.

Demand planning is the process of forecasting demand to ensure reliable delivery of products. Effective demand planning can clear the accuracy of revenue forecasts, align inventory levels with demand peaks and troughs, and increase profitability for a particular channel or product.

Item scheduling is a systematic approach to planning, buying and selling items with the goal of maximizing your return on investment (ROI) while making items available at the locations, times, prices and quantities required by the market.

Promotional planning is a marketing method for increasing the demand for products in retail stores based on special prices, display fixtures, demonstrations, value-added bonuses, gifts, and other promotions. Promotions help stimulate short-term consumer demand for products typically sold in retail.

2. Supply management

Supply management is generally divided into supply planning, production planning, inventory planning, capacity planning, and distribution planning.

Supply planning determines how best to meet the requirements generated from the sales plan. The goal is to balance supply and demand in such a way as to achieve the financial and service objectives of the enterprise.

Production planning refers to production and production modules within a company. It takes into account the allocation of employee resources, materials and production capacity.

Production Planning

Inventory scheduling determines the optimal quantity and timing of inventory to align with sales and manufacturing needs.

Capacity planning identifies the production personnel and equipment needed to meet product demand.

Distribution planning and network planning control the movement of goods from a supplier or manufacturer to the point of sale. Distribution management is a catch-all term that refers to processes such as packaging, inventory, warehousing, supply chain, and logistics.

Sales and Operations Planning 

Sales and Operations Planning (S&OP) is a periodically integrated management process that allows focusing on key supply chain factors like sales, marketing, demand management, manufacturing, inventory management, and new product features.

With a focus on financial and business impact, S&OP’s goal is to empower leaders to make better decisions by dynamically linking plans and strategies across the business. The S&OP, which is repeated frequently on a monthly basis, enables efficient supply chain management and focuses the organization’s resources on delivering what their customers need while remaining profitable.

Product and General Portfolio Management

Product portfolio management is the process of creating a product idea to bring to the market. A company must have an exit strategy for its product when it reaches the end of its profitable life or if the product does not sell well.

Product Portfolio Management Includes:

• New product introduction
• End-of-life planning
• Cannibalization planning
• Commercialization and ramp planning
• Contribution margin analysis
• Portfolio management
• Brand, portfolio and platform planning

Best Practices in Supply Chain Management.

To succeed in a growing global marketplace, you need a connected end-to-end supply chain inside and outside your enterprise. 

When using enterprise resource planning (ERP) systems and spreadsheets for planning, companies typically rely only on historical data, which leaves little room for change in the event of any disruption in supply or demand. For example, based on the previous year’s performance, a company can estimate the number of products it will sell in the next quarter. But what if a major hurricane destroys a key distribution centre, resulting in too little inventory on the shelves? With a mindful, real-time, supply chain planning solution, you can create “what-if” scenarios and plan more efficiently.

Would Your Business Benefit From Business Interruption Insurance?

When the disruption of your business happens through fire, theft, a pandemic, or other circumstances of property damage, and escalates beyond immediate damage, it enters the sphere of “business interruption insurance”.

So, what to do if your business could be hurt? What should happen if you can’t trade until the issues are fixed? Business interruption insurance is designed to answer this question and protect your income and ensure that you can pay bills and maintain relationships with your customers and suppliers.

What Business Interruption Insurance Covers:

• Lost profit. Based on the results of the previous months, a refund of profits would have been generated if the event did not happen.
• Fixed costs. The policy covers operating expenses and other incurred costs of doing business.
• Temporary location. Some policies cover the cost of moving to and working from a temporary business location.
• Commissions and training costs. After an interruption, it is often necessary to replace equipment and retrain staff. Business interruption insurance can cover these costs.
• Additional funds. Business interruption insurance can return reasonable funds over and above the fixed costs to enable the business to continue operating while it gets back on solid footing.
• Government-mandated closure. A business interruption event could cause the closure of businesses by government order, leading to direct financial loss. For instance, forced closures due to government curfews or street closings due to a closed event.
• Employee payroll. Payroll coverage is essential if you do not want to lose employees. This coverage can help the business owner with payroll when he is unable to do so.
• Covering taxes. You are still required to pay taxes even in the event of natural disasters. Tax coverage will help to pay taxes on time and avoid fines.
• Loan payments. Such payments are often made on a monthly basis. Business interruption insurance can help you make these payments, even if you are not generating income.

What Business Interruption Insurance Usually Does Not Cover:

• Items that are broken as a result of an insured event or loss (for example, glass).
• Flood or earthquake damages as these are usually covered by a separate policy.
• If you had undocumented income, not listed on your company’s financial statements it wouldn’t be returned by this policy.
• General effects of pandemics, viruses, or infectious diseases (e.g. COVID-19).

The insurer is only required to pay if the recipient has actually suffered losses as a result of the listed interruptions. The sum of funds that could be reimbursed for business can’t be bigger than the limit stated in the policy.

Insurance Changes During Pandemic

Usually, in the case of pandemics, insurance is not expected to be covered. Fortunately, the U.K. Supreme Court has handed down a judgment that will change the insurance coverage for Covid outbreaks.

Until the Supreme Court’s judgment, viruses didn’t actually break anything. But after the successful case, we hope, things will change.

What’s more is that there were some law exceptions in all-risk insurances.  They started in the 2003 SARS outbreak and those exceptions tend to include damage from viruses and infectious diseases.

Business interruption insurance reimburses policyholders for costs associated with events that result in a serious disruption of operations. The coronavirus pandemic has generated many claims, as well as controversy, over the extent to which the policy covers (or is expected to cover) losses.

Requirements for Government Action

Many businesses expected the new coronavirus to be declared as a notifiable disease due to the order for businesses to close. They expected this to enable them to file claims under the business interruption policy. And, as we remember, the government declared Covid-19 a notifiable disease on 5 March 2020 and advised most of the businesses to close from 16 March.

The Importance of Policy Statements

However, the insurance industry claims that only a few policies can provide coverage even if the government forces businesses to close. Over the past decade or so, insurers have changed the formulation of policies to rule out diseases not explicitly named.

The government and industry encourage you to refer to specific policy statements. 

Disputes and Lawsuits

Many insurers say that the language in their policies is unclear or appears to be open to claims, even though their insurers have argued otherwise. Small businesses can complain about this to the Financial Ombudsman Service (FOS).

The Financial Conduct Authority (FCA) said that few policyholders are likely to be covered. As we mentioned earlier, the Supreme Court ruled in September 2020 mostly in favour of the policyholders. This happened again following an appeal in January 2021.

Summary: What Should We Expect for the Future of Business Interruption Insurance?

While exploring the interruption policy disputes, we noted that the scale of the violation is that the insurance industry will not be able to cover the losses anyway. Different experts argue that this may be the case where the state should take responsibility. Otherwise, at least, we should strive for public-private partnerships.

Business interruption insurance is not sold as a separate policy but is an addition to your existing insurance policy. So, be careful and take the solicitor’s advice before signing such a statement.

The Small Business Grant to Help You Recover After The Pandemic

The Covid-19 pandemic has really hurt our nation in some of the worst ways imaginable. Endless lockdowns mean a number of businesses have had to reluctantly close shop, which inevitably means huge losses, and some have even had to close their business altogether. When national restrictions forced many businesses to go under, the government decided to implement LNG Supplemental Agreement schemes (closed).

The Small Business Grant Fund (SBGF) supports small and rural businesses in England with their business costs during the pandemic. It was imposed by the government so small businesses may be eligible to participate in LNG Supplementary Agreement schemes to stay afloat and be able to return to pre-pandemic levels of work when the time came.

Grant Application Deadlines

Deadlines for applying to the Supplementary Agreement (closed) schemes are published on the UK government website, but just to reiterate them:

1. Scheme and date:

National isolation from 5 November 2020 to 31 March 2021 had two billing cycles.

The national isolation period started in January.  The first billing cycle was from January 5 to February 15, and then again from March 31, 2021.

If your business cash flow was unsettled between national isolation, January 5, 2021, and the second billing cycle from February 16 to March 31, 2021, you might have a chance to obtain the small business grant.

Defining Eligibility

You may be eligible for the small business grant for coronavirus if:

• you are based in England
• it occupies the property and pays commercial rates (and is the payer of the rate)
• it was forced to close due to a national lock from January 5, 2021, or from November 5 to December 2, 2020.
• during that time or longer, it cannot provide normal personal customer service from its premises

For example, a list of eligible businesses can include non-essential trade, leisure, personal care, sports facilities, tourism, and hospitality. This may also include companies that operate face-to-face, but for that time have been forced to provide an online or take-out-only service.

If you’ve found yourself on the eligible businesses list, you can receive one grant for each property outside the home.

However, you cannot get funding if:

• you can continue to work during the lockdown because you are not dependent on direct personal services from your premises (e.g. accountants)
• you chose to close but it was not necessary to close due to national restrictions
• your business is run by the administration, is insolvent, or has been deleted from the register of Companies House
• you have reached the allowed subsidy limit

You must notify the local council if the business situation changes and you no longer meet the selection criteria.

Subsidy for COVID-19

New domestic subsidies for COVID-19 business support will start working on March 4, 2021.  Be careful, because the applications submitted before this date are subject to the previous rules.

The scheme is covered by three subsidies:

1. Small amounts of financial assistance – receive up to £335,000 (depending on the exchange rate) over any three years
2. Business Grant for COVID-19 – businesses can get up to £1,600,000
3. Special COVID-19 Business Grant Allowance – if you have reached your limits under the previous two grants, you may access the ‘Additional Funding Allowance’ under the rules of this scheme up to £9,000,000

Grants under these three benefits can be combined to generate a potential total benefit of up to £10,935,000 (depending on the exchange rates).

Outcome

The general amount of the subsidy will depend on the billed value of the property on the first full day of isolation. 

Small business grants for the period from January 5 to March 31, 2021, will be based on the property’s estimated value on January 5, 2021. The first billing cycle covers January 5 – February 15, 2021.

If your business has a property with an assessed value of £15,000 or less, you may get a cash grant of £2,001 during the mentioned 42-day qualifying period of restrictions.

If your business has a property value of between £15,000 and £51,000, you may get a cash grant of £3,000 during the 42-day qualifying period of restrictions.

Finally, if your business properties appraised value is £51,000 or higher, you may claim a cash grant of £4,500 during this 42-day qualifying period of restrictions.

You will also be eligible to receive a one-time lockdown payment, which your local council must pay together with the first billing cycle grant under this scheme.

The second billing cycle covers February 16 – March 31, 2021. For this, if your business has property worth £15,000 or less, you may be eligible for a cash grant of £1,334 during the 28-day restriction period.

If your company owns property with a value of more than £15,000 and less than £51,000, you may get a cash grant of £2,000 for a 28-day restriction period.

Finally, for business real estate valued at £51,000 or higher, you may claim a cash grant of £3,000 during the 28-day restriction period.

Application and Conclusion

Details of grant applications differ from community to community, so you should visit your local council website to find out how to apply. These small business grant schemes can help your business stay onboard during a crisis like a lockdown. If you want to get your cash – don’t wait, head to the government website and apply.