Supply Chains and Logistics – How Accountants Can Help

Supply chain management involves controlling the upstream and downstream flow of materials and finances — from sourcing to manufacturing and distributing to retailing and finally to the hands of the consumer.

It encompasses planning, designing, purchasing, production, logistics and quality. Supply chains work through collaborations and partnerships to gain efficiencies, such as just-in-time manufacturing systems that operate very small inventory reserves.

The proper monitoring of supply lines is critical. Many companies touch a product before it reaches the customer. Companies in a supply chain exchange information about fluctuations in availability, timing, shipping and seasonal variability.

Accountants can help in identifying costs and value add to processes across organizational boundaries and to support different types of relationships between companies. The cluster of businesses that make up the supply chain need to be appropriately configured and networked to a central database, sharing forecasting systems with real-time updates.

Efficient supply chain management ensures that a company maintains a constant flow of fresh products at an optimal level that matches customer demand while keeping inventory levels lower in order to minimize carrying costs.

In running a business, you’ll be dealing with large volumes of goods, which translates to high carrying costs, as you have to ensure that your products are stored well and in good condition to reach your retailers.

You want to be able to spot slow-moving shipments and track warehouse management functions, especially if you have stock in different locations. You want all relevant parties to have access to timely information — real-time stock updates to minimize the risk of overselling.

Here’s where accounting comes in handy.

It’s important for logistics to cut excess costs and to deliver products faster and cheaper by controlling internal inventories, production, distribution and inventories. Accountants play increasingly vital roles in strategies, as well as planning and execution of supply chain management.

An accountant serving on design and implementation teams will provide analytical expertise, an economic perspective and an objective mindset to help examine, evaluate and prioritize the opportunities and challenges of the supply chain. Accountants can meet with the team charged with design, development and execution of supply chain planning.

What accountants they bring to the table?

Accountants work to facilitate long-term sustainability of supply chains and add value to their management by creating competitive advantage through improvements.

By keeping an eye on the total costs of supply chains, you’ll be working to maximize efficiency when goods are moving from original suppliers to end users. By helping to control the flow of materials — and finances — you’ll ultimately get better business results.

Reach out to MHCS if you want to increase cash flow, get better business results, and identify efficiencies your manufacturing company.