Inflation is an increasingly common economic factor. For small and medium-sized businesses, this can be a major problem for business profits.
As inflation increases, it becomes more difficult for companies to maintain their margins while raising prices. This is because the average customer would react negatively to price increases while also having a limited ability to absorb price decreases in order to maintain their margins.
The solution for SMEs to manage inflation is not only to adjust prices but also to adjust margins, which will give them more room to maneuver in the face of high inflation rates.
How to react intelligently?
The problem with the current situation is that it is difficult to raise prices. So, one way of thinking is: what can we do to maintain our margins and that, without increasing our prices?
A first track: artificial intelligence to optimize the cost of raw materials
With the help of AI, raw materials can be managed in terms of volume, which makes it easier to reduce operating costs.
This is because it has become possible to track the material that has been used and the quantities available. This helps us to calculate the amount of raw material that will be needed for production at any given time. artificial intelligence also helps with inventory management and supply chain optimization.
For those who have time, we invite you to discover the thesis of Charles Froidevaux (1973), and you will see that AI has not invented anything but that its ability to process a large number of data makes extreme optimizations possible (https://doc.rero.ch/record/5588/files/1_these_FroidevauxC.pdf).
Free courses for SMEs to learn how to use artificial intelligence models are available at https://www.elementsofai.be/fr.
A second track: optimizing purchasing processes
We need to find ways to reduce our operating costs. This can be done by negotiating with suppliers and finding new process optimizations.
The first step is to determine the most appropriate time to purchase from your supplier. This takes into account the lead time required for an order, inventory levels, order size and delivery delays. The second step is to work with suppliers to develop a strategy that will help them meet deadlines for both your company and theirs.
Our best lead: with 24PM and its load reduction service
Companies often turn to 24PM's Cost Killing service for help with purchasing and procurement. With the help of this service, you can review all of your purchases and select the items that are best suited to your business needs. This saves you money on the prices of these items as well as all other expenses related to your own procurement work.
More information on: https://reload.24pm.agency/fr/produits-services/diminution-des-charges/
These are obviously not the only avenues: we also need to keep in mind that we can control inflation for our customers by offering them discounts or incentives such as free shipping or an introductory offer.
