As the new year recedes in the rearview mirror, we speak to Matthew Bull, Commercial Manager at Dawsongroup Finance about how, in the capital-hungry warehouse and logistics sector, a strategic approach to procuring and funding assets can support businesses’ financial resilience and operational flexibility in 2024.
This looks set to be another busy year for the warehousing and logistics sector, as high customer expectations and the demands of e-commerce up the pace of the race to optimise supply chains and improve efficiency and productivity.
Automation is transforming operations, with ever-more sophisticated technologies offering improvements to handling, storage and distribution processes. To stay competitive, businesses need to keep up and take advantage of the benefits.
But hard assets, like Automated Guided Vehicles (AGV) and Autonomous Mobile Robots (AMR) and even soft assets, such as the increasingly sophisticated inventory and fleet management systems available, can come with a hefty price tag.
So how can businesses acquire the assets they need, while managing risk, safeguard capital, and ensuring monthly outgoings remain manageable?
No more ‘borrow and buy’ thinking
The key is an intelligent approach to procuring and funding the assets a business needs to thrive, so that they deliver their full value and usage, but in a way that minimises their cost.
Rather than thinking about just spreading the cost, the idea is you only pay for what you need – financing an asset for the period it is useful and working hard to earn money for your business, rather than necessarily for the lifetime of that asset.
By transitioning to a usership model, especially when an asset provider can offer a maintenance programme or regular equipment upgrades, a company can reduce costs, improve productivity, and keep their all-important capital liquid to invest in growing the business.
One size doesn’t fit all
In a sector where there is such a variety of tools and technology, there is no one size fits all approach to the procurement and management of assets across their lifecycle – from acquisition to operation and maintenance, to upgrading and disposing of them.
That’s why understanding how a business works and what an asset will do for that business should be at the heart of structuring the right finance solution.
Sometimes a rental option is the best fit. When that’s the case, we, for example, would connect a client with our colleagues across Dawsongroup PLC, a specialist group of companies providing asset rental and leasing services across an array of industries.
Not being bound to any manufacturer or supplier, we aren’t required to push any particular product. We don’t push any particular finance solution either. We believe in a case-by-case approach, with a focus on understanding each business.
Usership over ownership
All of this requires a shift in thinking, from the concept of ownership to the concept of usership, assets come with inherent risks, such as depreciation and obsolescence. A smarter asset strategy shifts some risk to the asset provider, who takes responsibility for the asset’s lifecycle management. This mitigates your exposure to potential losses and ensures you have access to the latest technology and equipment. In this way, businesses can be more agile, responsive to market trends, and adaptable to changing customer demands.
When asset procurement and management is genuinely tailored to how your business works, and the way in which each asset will be used, wasted cost is cut out. It can make a huge difference, helping you maximise financial resilience and operational flexibility so you can position yourself to seize every opportunity 2024 sends your way.
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