Four Supply Chain Strategies for a Lowinterest Lending Environment

Four Supply Chain Strategies for a Low-interest Lending Environment

 With expectations of a potential 20% to 40% increase in the cost of short-term borrowing by the end of 2015, the window of opportunity is quickly closing for those who want to rebuild their operational and logistical muscle mass to stay in peak operating and fulfillment condition for their suppliers, distributors and customers.

Coming out of the recession companies are now looking to invest in both equipment and technology.  With expectations of a potential 20% to 40% increase in the cost of short-term borrowing by the end of 2015, the window of opportunity is quickly closing for those who want to rebuild their operational and logistical muscle mass to stay in peak operating and fulfillment condition for their suppliers, distributors and customers.

So where do manufacturers start investing?

Invest in equipment and tools for manufacturing and assembly lines, including packaging equipment and materials.

Funding equipment upgrades and investments in today’s low interest rate environment provides multiple benefits. Smarter packaging systems can drive a core spend reduction if manufacturing-intensive organizations put the most efficient packaging and tools in place. These systems can drive down material and process costs in their supply chains and enable them to reap both return on investment and assets and efficiency savings sooner.

For example, a beverage manufacturer who hires external suppliers to manufacture, stock, ship and manage the carrying costs of packaging—including several sizes of bottles, corrugated materials, pallets, shrink-wrap, etc.—and label printing could benefit from owning packaging equipment and making their own bottles.

And instead of hiring outside suppliers to prepare thousands of different bottle labels, integrating a print-on-demand labeling system into the internal production process greatly increases production efficiency, enables customization and improves responsiveness. With better packaging comes better “product density,” which enables manufacturers to get more items in a case, more cases on a pallet, and more pallets on a truck, to reduce shipping and handling costs.

Packaging optimization improves productivity in other areas, too—from ensuring better inventory management and space utilization to reducing manufacturing footprint and expediting manufacturing run changes. For example, packaging-on-demand enables the manufacturer above to build the exact quantity of packaging required, rather than depending on the supplier to ship—and charge for—extra inventory.

More investment strategies on IndustryWeek.

IndustryWeek is a companion site within Penton's Manufacturing & Supply Chain Group. 

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