The automotive industry in Malaysia has been a stable and productive economy for quite some time. Its origin traces back to the British colonial era, where Malaysia was transformed from an agricultural nation to an industrial one. Because of this, sectors continued to advance and thousands of Malaysians were employed.
Malaysia’s automotive industry still continues to flourish up to this day. In fact, the strong economic growth resulted in more than 25 vehicle manufacturers, paving the way for stabilising more than 600,000 jobs.
However, despite the continuing growth of Malaysia’s automotive industry, there is still room for improvement. With a potential for economic greatness, Malaysia can surely benefit from the advantages of innovative supply chain methods.
Room for improvement
Since the industry is dominated by big competitors, local manufacturers find it challenging to strive in a tough competition. As such, the need for appropriate organisational planning is required. To initiate such planning, companies can largely benefit from market orientation. With market orientation being a priority for companies in the industry, innovative supply chain methods began to play a more significant role.
Malaysia has already established itself as one of the world’s leading automotive manufacturers. Why should the ever-growing industry stop there when there’s much potential for greater excellence? The stability of the industry could be reinforced with better financing methods, especially when it comes to developing supporting sectors such as transportation, finance, and logistics.
Supply Chain Financing 101
How can the automotive industry benefit from innovative supply chain methods? In the world’s current state, the global economy can largely benefit from supply chain financing. One of the best advantages of supply chain financing boils down to mutual benefits for both parties. Here are the advantages of both respective parties.
- Shared visibility: All parties involved are able to view supply chain events which usually involve logistics-related activities.
- Access to ERP systems: Integrated ERP systems are available for accounting and organisational management purposes.
For the manufacturer/supplier:
- Efficiency is improved: As soon as the goods are provided and approved, quick access to receivables is immediately effective. The supplier can receive payment in less than 24 hours.
- Flexible payments: Expect faster payment when individual cash flow requirements are needed.
- Control over cash flow: The supplier has complete control over their cash flow, providing the needed flexibility for growth and forecasting.
- Financial growth and innovation: Supply chain methods provide the supplier with available working capital needed for increased demands.
For the buyer:
- Stronger relationship with supplier: With faster management and overall flow, the buyer-supplier relationship is strengthened.
- Stable financing: Maintain a healthy financial base which will provide a more consistent service to the buyer.
- Improved liquidity: The buyer has the chance to extend payment terms without affecting the financial relationship with the supplier.
With so many advantages for all parties involved, it’s no doubt that Malaysia’s automotive manufacturers and suppliers can enhance their organisational management thanks to supply chain financing methods.
Learn more about supply chain financing and its methods of innovation with Nufin Data, a leading provider of supply chain solutions. For enquiries regarding invoice financing and reverse factoring, contact us and discover how we can enhance your business’s financing capabilities