A recent survey on Industry 4.0 by Tata Strategic Management Group and FICCI unveiled a report which stated that the Indian manufacturing sector awaits modern trends, in the near future, in collaboration with 50 leading engineering enterprises of the country.
This survey also revealed that the government aims to increase the contribution of the manufacturing sector to 25% of GDP by the end of 2022.
In order to keep the above target, various companies in the country have shifted their focus to compete on the global stage by implementing advanced manufacturing trends in their business module.
Such modern trends include additive manufacturing, internet of things, advanced robotics, augmented reality, etc.
However, before adopting the above manufacturing techniques, one should be aware of the fundamental concepts that create the backbone of the workflow, which are supply chain management, inventory management, channel and invoice finance, etc.
Important concepts that are essential to run a business
One of the primary drivers behind the growth of the manufacturing industry of India is the willingness to invest in innovative management systems such as the following –
- Supply chain management
The primary objective of the supply chain management or SCM is to enhance workflow in each segment of the supply chain.
The latter is the administrative process of sourcing raw materials, which a manufacturing enterprise requires to create a product (or service), and delivery of the finished product to the end-user.
An efficient SCM usually comprises the following components –
- Preparation and arrangement,
- Sourcing of raw materials,
- Manufacture of the desired product,
- Delivery to the customer,
- Return of excess, defective or unwanted products,
- Enabling process for quality assurance.
An optimised SCM system works along with the above areas of a supply chain to reduce the cost of production, shipment, storage and other expenses, thereby saving a large portion of the working capital.
2. Inventory management
It is a systematic approach for the usage of the company inventory to store items relevant to manufacturing or delivery.
This system also covers the management of raw materials, finished goods, returned products, defective items and also warehousing of these storage items.
Business modules that possess a complex supply chain face a lot of difficulty in optimising their storage facilities.
In such cases, inventory management systems such as just-in-time manufacturing, EOQ or economic order quantity model, MRP or materials requirement planning, LIFO, FIFO, etc. provide substantial assistance in determining the right balance to streamline the SCM.
3. Channel financing
Channel financing is a type of a short-term credit facility which financial institutions offer to the stakeholders (buyers and suppliers) of a supply chain.
Such financing regime helps both suppliers and distributors to sustain a seamless workflow by negating any issues related to delay in payments, late fee charges, etc.
4. Invoice financing
Invoice financing is a type of short-term credit where businesses use their bills receivables and invoices as collateral to avail financing. Most businesses find that using an invoice template for financing transactions saves a lot of time. Learn more about free invoice templates to surely experience the good benefits it will give to your business.
If a certain situation arises where customers are facing difficulty in availing a business credit, invoice finance comes can be beneficial as it removes any delay in payments.
Invoice finance can be categorised as the following terms as per its working principle –
- Invoice discounting.
- Receivables purchasing.
- Factoring.
Other than invoice financing, firms can also make use of business loans from NBFCs. Bajaj Finserv is one such lending institution that offers such loans at a competitive rate of interest.
This NBFC also brings forth pre-approved offers that make availing loans hassle-free and straightforward.
Hence, from the above discussion, you can learn about the various management systems like supply chain management, inventory management, channel and invoice finance, etc. that modern businessmen take into consideration while running their company.
Such concepts not only help to optimise the whole process but also generate substantial revenue, which individuals can use to expand their manufacturing business in the future.