Strengthening Irish business

Entering a period of uncertainty, it is critical that Irish businesses are trading efficiently. During rapid expansion organisations  endure lower margin revenue lines and develop additional costs as a buffer to enable growth.

Irish businesses should examine revenue  lines, their profitability and margin enhancing opportunities, making decisions on poor performing revenue lines evaluate their overall cost base, including indirect costs. Improving operational efficiency, understanding market losses, and scaling successful offerings are key strategies.

Performing this analysis upfront ensures Irish businesses can approach their external supply chain related challenges in a more reasoned manner, balancing organisational efficiency and external commercially focused negotiations.

Regardless of global conditions, it has long been a logical, risk adverse strategy for Irish businesses to diversify their supplier base across different geographical regions, with a particular focus on where end customers are. Tariffs often apply not only to end products, but also components – so it makes sense to orientate your entire supply chain near a customer base.

Equally, it is becoming increasingly important to have multiple geographically spread suppliers companies ensuring a steady flow of materials and components, even if one supplier faces challenges, be they internal (operational, financial or legal) or external (geopolitical or climate change related).

In cases of sole sourcing, building a strong relationship with suppliers (as discussed later) is critical.  

Advanced technologies such as artificial intelligence (AI), machine learning, and blockchain can significantly improve operational efficiency, particularly in manufacturing settings. AI and machine learning can not only aid production line efficiency, but can also help predict potential disruptions by analysing vast amounts of data, allowing companies to take proactive measures.

Blockchain technology such as that offered by ubloquity, a Northern Irish company, enhances transparency and traceability, ensuring that all transactions are secure and verifiable, particularly important with the ongoing increase in export related paperwork. Investing in these technologies can lead to more efficient and resilient operations and offer greater visibility to increasingly brittle supply chains.

Industry and government bodies such as Irish Manufacturing Research can also provide valuable support in adopting these technologies.

Maintaining strong relationships with suppliers and partners is crucial. Companies should foster open communication and collaboration, ensuring that all parties are aligned, not just on where they interact (or “nodal points), but also ensuring absolute efficiency in internal operations which avoids unnecessary administration or rework. Regularly reviewing contractual performance and operational KPIs can help address any potential issues before they escalate.

Strong relationships also facilitate quicker responses to disruptions, as suppliers are more likely to prioritise “favoured, good customers”. While tempting to set prices with suppliers now, Irish businesses should carefully balance market pricing on commodities with hedging, especially for materials or components with limited global diversity of supply.

Test these strategies with a limited supplier and customer pool and accurately model impacts on your wider organisation.

While not top of every executive’s agenda, effective risk management is proving increasingly important in day-to-day supply chain management. Companies should conduct regular operational risk assessments and supply chain due diligence exercises, such as those offered by KPMG, or relevant industry associations such as CIPS, to understand vulnerabilities within their supply chains.

Contingency planning is equally important; having backup plans in place ensures that companies can quickly adapt to unforeseen circumstances. This includes having alternative transportation routes (and providers), potential call-off agreements with backup suppliers (depending on criticality of goods/components), and emergency response protocols. These should be reviewed regularly and tested as a paper exercise at least once every three months (or more frequently if a significant risk, or market conditions change). 

Incorporating sustainability into operations and supply chain management not only benefits the environment but also enhances resilience. Sustainable practices such as reducing waste, optimising resource use and circularity of materials leads ultimately drives a transformation in operational efficiency, driving more robust manufacturing operations and mitigating some external cost pressures associated with using new materials.

Industry associations and specialised consultancies, including KPMG Sustainable Futures, can provide valuable guidance in integrating sustainability practices, while bodies including Irish Manufacturing Research can assist in developing sustainable, and circular manufacturing processes.

Supply chain and operational robustness is not a one-time effort; it requires continuous improvement. Companies should regularly review and update their supply chain and operational strategies, incorporating lessons learned from past disruptions.

Depending on organisational preference this may follow a Lean or Kaizen methodology, externally driven, or may be as simple as an ideas box with an agreed review meeting.

Staying informed about industry trends and emerging risks allows companies to adapt and evolve their supply chains to meet new challenges.