Supply chain management is a battle for any small business. You may feel you’re a low priority for suppliers who favour high-value corporate accounts but there’s no reason to stay at the mercy of vendors. By adding more effective management strategies to your supply chain, you can improve everything from cash flow to customer relations.
Build Relationships With Multiple Suppliers
A single delayed order can have big repercussions for a small business. If you’re a manufacturer and your primary supplier is late with a delivery, that holds up your production process and causes you to miss customer deadlines. As a result, you may end up with fewer repeat orders and lower profits. Having multiple suppliers helps you avoid this situation, so find one or two emergency backups for each of your main vendors, or split your orders between multiple suppliers to avoid a crisis due to a delivery delay.
Some supply chain problems come from low-quality materials or parts. A faulty component makes customers unhappy, so your supply chain needs rigorous quality control measures every step of the way. Start by adding a policy to each contract that lays out expectations, holds your suppliers accountable, and specifies the consequences of not following through. You might ask suppliers to reimburse the costs of a bad shipment or guarantee rush delivery of a replacement. Review each vendor regularly; if quality is a recurring issue, maybe you shouldn’t renew the contract.
Logistics the way goods and materials move through your supply chain can make or break your company. If you have a complex network of suppliers, invest in supply chain management software from companies such as SAP. These programs let you keep track of complicated lead times, freight delivery schedules, and shipments to customers, so you can design a more efficient production or retail supply process. For a smaller operation, you can improve logistics by tracking lead times, investing in reliable shipping carriers, and carefully monitoring the performance of each transportation provider.
Improve Inventory Management
Inventory is a key part of supply chain management for any small business. You have to strike a balance between keeping enough inventory on hand to ensure a steady sales flow but not so much it wastes your storage capacity. Instead of using broad rules to set safety stock levels, try using formulas that take into account your sales forecasts, lead times, and production schedule. Recalculate every few months to ensure you’re working with updated numbers. For online retailers, you can reduce inventory hassle with drop shipping: Your customer orders from you, and you buy the merchandise from a third party who ships it to the buyer.
Software programs such as Fishbowl are a big help in managing inventory. Fishbowl makes managing multiple suppliers and setting up automatic reorders easy. This program also integrates with QuickBooks Canada for easier accounting and tax reporting for the CRA. If you use QuickBooks online, you can integrate it with applications such as Shopify for interconnected sales recording and inventory transfer.
Bringing in Outside Help
If you’re new to supply chain management, you might want to bring in a skilled consultant who can look at your company from many angles: operations, sales forecasts, inventory, and supply chain functionality. Some consultants even provide management training to ensure each department follows best practices.
Improving your supply chain management takes a lot of time and energy, but it pays off with more predictable product cycles, happier customers, and higher profits.