Supply Chain Analysis in Housing Development

Random sky and building picture

The housing development industry in Singapore has always been a competitive market. It heavily relies on quality progress and steady manufacturing. As such, the need for effective supply chain management comes into play.

Supply chain management refers to the managing of the movement of raw materials into an organisation. It also includes internal processing of materials into finished goods, which is then moved out towards the consumer. This method is essential for organisations seeking to stay ahead in a competitive market.

In the housing industry, supply chain management makes it easier for organisations to improve the velocity of inventory movement. This is a huge advantage for housing companies since the manufacturing process and quality of improvements are top-list priorities.

Housing development in Singapore

In Singapore, long-term planning is important, especially in the housing industry. Urban cities are already sprawling around the country, making natural resources almost non-existent. Because of this, there’s an imbalance of housing supply and demand for quite some time.

The housing industry has experienced some constraints related to sustainability. Planning for sustainability is already considered a form of survival in this day and age, due to the factors affecting Singapore’s housing supply. The country is already densely populated, making the demand for housing supplies an urgent requirement.

An effective supply chain management can greatly boost the effectiveness of a housing company’s progress. Here’s why supply chain management should be adopted in the industry as of today.

The effectiveness of supply chain management

Supply chain refers to the network of all individual, resources, organisations, and activities involved. Managing the organisation’s supply chain makes it quick for materials, resources, and information to be moved from the supplier to the manufacturer.

There are two solutions when it comes to supply chain management. There’s invoice financing and reverse factoring.

INVOICE FINANCING – Improves cash flow and lets organisations decide when to cash in on the invoices approved buyers. This allows the customer to not immediately pay for the goods provided to them. Invoice financing is like a form of short-term borrowing that allows organisations to use their unpaid invoices.

Nowadays, traditional invoice financing is not highly recommended. Instead, housing organisations can utilise improved invoice financing methods that can give them better benefits such as fast working capital and full invoice payments from customers.

REVERSE FACTORING – The financing solution known as reverse factoring (or supply chain financing) pertains

to the financing of receivables from a supplier as processed by the ordering party to help suppliers gain more financial terms. It is generally considered to be an effective form of cash flow optimisation for organisations looking to outsource large volumes of services.

Reverse factoring greatly benefits both parties involved. For the buyer, there’s no commitment to resources and risks are minimised when suppliers are healthy. As for the supplier, payment comes earlier and approved invoices are visible immediately.

These two factors of supply chain management play a huge role in undermining Singapore’s housing development problems. As such, organisations will greatly benefit as long as they incorporate supply chain management in their business.