In the market of today, money and trust are everything. The world runs on money, and people run on trust. Large companies have a lot of cash to influence the market, but what about medium-sized and small corporations? Are they supposed to sit back while other companies enjoy discounts in bulk?
What does leveraging supply chain mean?
Leveraging means using something to your advantage. In terms of the supply chain, it means using economies of scale (how cheap or costly an item is when it is bought in bulk) to your advantage. This may include increasing the number of items you order at a time, ensuring that all sales the supplier makes to you are final, converting all (or most) of your supplies to orders, and making timely payments.
Making sure you do so makes sure that both parties (you and your vendor) make the most of the supplies that are being provided to you. If you earn more money, you’ll be able to buy more supplies or invest in better supplies. Economies of scale are significant in a supply chain; understanding them is the key to success in your business. There are various advantages to leveraging your supply chain; for one, you’ll be able to get better discounts. Let’s look at these advantages in detail now.
How is it advantageous?
Leveraging your supply chain has various advantages in the long run for your company. Especially if you are dealing with many supplies, your supply chain is the main area of your business. Here are a few of them listed out:
- It standardizes the discount rates. If you are ordering from the same supplier multiple times, it is possible to get the rates at which you buy your supplies constant. This way, you can decide your inventory efficiently and do not need to haggle too much with your vendor.
- You can divide your working capital between large suppliers (which provide most of your supplies) and niche ones (which are not as big but provide you with products you can’t procure from elsewhere). This balance is reasonably necessary if you are looking to do successful business.
- You can get more value for less money. If you order in bulk, the cost of the goods goes down. For example, if you are ordering 50 samples of a product, you might be getting them at Rs. 10 per sample, but if you are ordering 100 samples, you might be getting them at Rs. 8 per sample. When this slight difference in the price of one product exemplifies over huge sample space, the discount rate is enormous.
What is dynamic discounting?
Dynamic discounting is a way of leveraging the supply chain by making early payments and getting the vendor to give you a discount on what they are selling. This has a lot of advantages in the current market as it allows small and medium businesses a fighting chance against the big fish. This is why dynamic discounts are gaining popularity nowadays; they are gaining traction in this age of startups and growing industries.
This is a risk-free return for the cash the buyers save, helping them invest the money in their business or investing it in another part of the business. This allows the community to grow and the businesses to flourish, so dynamic discounting is one of the most well-accepted cultures in today’s market. If you are a budding startup, you too can leverage your supply chain in such a fashion that your supplier gives you discounts, and you can use that budget elsewhere or in research and development.
The future of dynamic discounting
Dynamic discounting and leveraging the supply chain have a bright future. With startups emerging left and right, there has been a massive boom in all industries, where there is an appropriate market to sell anything, but not the right conditions to acquire the raw materials or make the products. To cross this hurdle, a proper supply chain is required that lets the company overhaul any troubles it is facing and move towards success.
Leveraging the supply chain does precisely that; it provides the right opportunity to people who need it the most. It gives all the small and medium businesses a chance to thrive in this competitive market which is dominated by large corporations with all the money. Dynamic discounting is a much more flexible way to do deals; once it catches on, it is sure to become the next best way to make any deal.