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The supply chain for industrial manufacturers is beginning to more closely resemble a B2C model. Manufacturers are bypassing wholesalers and retailers, to sell directly to buyers. As companies implement e-commerce websites as a complement to traditional retail channels, they now have the ability to reach more customers and generate more revenue. But these financial benefits bring associated risks. In direct selling, manufacturers must now assume the responsibility of safely shipping products and collecting payments. And for those with a large global presence, it poses a greater degree of risk. Depending on the shipping terms, Flexible Parcel Insurance and UPS Capital Cargo Insurance can be an important risk mitigation strategy that can protect high-value goods in transit that may be time sensitive and prone to loss, damage or delay.
Since more and more industrial manufacturers are moving to a direct sales model, companies need working capital to transform former warehouses into high-tech fulfillment centers. To build an efficient outbound operation, working capital may be required to fund technology and equipment enhancements. Distributors, however, are a different story. With the changing purchasing landscape, distributor margins continue to shrink. And, with distributers increasingly importing goods from other countries or territories, funding can be tied up in inventory for up to 60 days.
Being able to finance goods in transit is a game changer for cash flow. In both instances, UPS Capital Cargo Finance can help free cash tied up in the supply chain, enabling greater purchasing power and control.
And with the changing landscape, slow or non-payment of goods is a challenge both manufacturers and distributors face. When you have a number of buyers located in different cities or countries or territories, holding them accountable can be risky business. Trade credit protection services can help facilitate payment by quickly converting invoices to cash, collecting on outstanding receivables, and minimizing buyer credit risk.
The financial challenges in the industrial manufacturing industry are more complex than ever before. A smooth-running supply chain is essential to succeed in such a highly competitive industry. Leverage UPS Capital® products and services to enable a more flexible, efficient, smoothly running supply chain.
1 Studies for 2013, based on intelligence from First Research