Finance

Study your supply chain

Oliver Milman /

The TaskmasterThe details of the Gillard Government’s carbon tax are out and there is plenty to digest before the tax comes into effect from July 1, 2012.

 

While the package contains an avalanche of compensation for households and those industries that will actually pay the tax (think coal, steel and heavy industry), there is actually very little for small business.

 

But SMEs will be in the firing line – as costs rise throughout the economy, SMEs are going to be the ones passing on these costs to consumers.

 

You will have two choices: raise costs and protect margins or hold costs steady and take a margin hit.

 

If you think price rises are going to be tough to pass on to consumers, you’d better start examining your supply chain very closely.

 

How will the carbon tax impact various suppliers? Which raw materials are set to rise? Which suppliers are going to be hit with big cost rises and which ones have the market power to pass them on?

 

Are their suppliers who can be changed? Should you put supply contracts out to tender now and try to lock in prices?

 

And most importantly, where can you cut costs?

 

This is crucial analysis so get it done – today!

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