Global and regional supply chain disruptions aren't easing up. Manufacturers of all sizes face increased costs, delayed production, strained customer relationships, and other challenges. While many of these factors are beyond your control, you may be able to build business resiliency to facilitate response and mitigate impacts.

Learn how to stay agile and operational by implementing flexible financial strategies to absorb shocks, maintain operations, and meet market demand when the supply chain becomes unpredictable. 

Financial Challenges Caused by Supply Chain Disruptions

Understanding the challenges manufacturers may face may help you prepare for the unexpected. Here are some common causes of financial strain during unpredictable times:

  • Increased costs for raw materials and transportation. Scarcity of inputs, shifting trade routes, and higher fuel costs drive up prices. You may also need to pay a premium to secure materials or expedite shipping.
  • Delays in production timelines or order fulfillment. Late component shipments may cause production slowdowns and impact deliveries, affecting revenue timeline and customer trust.
  • Cash flow gaps due to inventory build-up or advance purchases. You may need to order materials in bulk or make deposits far in advance to secure them, which can tie up capital and create cash flow problems.
  • Payment delays from customers. Your customers may also face financial strains and delay their payments, creating further liquidity pressure at a time when cash is most critical. 

Mitigate Supply Chain Impact with Sound Financial Strategies

While you can't prevent supply chain disruptions, you can take control by strengthening your financial position. Here's how to combine proactive planning with flexible financing to maintain steady performance:

Strengthen Cash Flow Resilience

Forecast your cash flow to consider factors such as longer lead times and potential payment delays. Use digital tools like PNC Cash Flow Insight® to track real-time inflows and outflows and adjust spending or collections promptly.

Secure Flexible Financing Ahead of Time

Establish lines of credit or short-term loans before you need them to cover temporary working capital gaps. Consider inventory or purchase order (PO) financing to ease the burden of large, upfront material purchases.

Diversity Suppliers and Build Strategic Buffers

Financially prepare to carry more inventory or place larger minimum orders to maintain production. Also, reevaluate how you balance just-in-time efficiency with just-in-case resilience to ensure capital is available to support your strategy.

How Banks Help Manufacturers Navigate Supply Chain Pressure

A business banking professional can provide specialized solutions and expertise tailored to your operational cycles and supply chain challenges, helping you stay agile during uncertain times. Here's what to look for:

  • Working capital solutions customized for your production cycles. Your bank may be able to structure financing to align with seasonal demand, longer lead times, or larger upfront material costs.
  • Treasury management services to improve cash collection or vendor payments. Digital payment solutions streamline receivables and payables, helping you reduce delays in collections while strengthening supplier relationships.
  • Relationship managers who understand manufacturing workflows and risk factors. A knowledgeable professional may anticipate challenges and recommend the right tools to support your business model.
  • Digital tools for forecasting and planning. Technology-enabled platforms, such as PNC Cash Flow Insight, support accurate decision-making by offering real-time visibility into cash positions, future obligations, and potential shortfalls.

Gain a Competitive Edge with Financial Resilience

By strengthening cash flow forecasting, securing flexible financing, and preparing for shifts in supplier and customer dynamics, small manufacturers may maintain agility even when the supply chain becomes unpredictable. An experienced banking partner that understands the complexities of production cycles and global supply networks can help you maintain efficient operations, foster customer trust, and gain a competitive edge.

Connect with a PNC business banker today to see how we help you optimize cash flow, access capital solutions, and mitigate potential supply chain risks.