- All hands on deck
- Third party logistics are your friend
- Maintain clear communication with suppliers
- Solicit customer feedback
- Know your inventory
- Read some case studies to guide you
- Spend capital strategically
Supply chain management for small businesses is a challenge that never lets up -- and it's a challenge that requires even more attention during a rapid growth phase. With all the excitement of the momentum comes extra pressure to keep your customers happy while maintaining a competitive advantage in your marketplace.
As you may have noticed, streamlining your supply chain becomes more complicated when you're introducing new products, especially if you sell via e-commerce: What looks like supply chain issues quickly bleed into inventory management and customer experience issues. In fact, supply chain issues touch every part of the business, from product research through final sale and customer satisfaction.
To that end, here are 7 supply chain strategy tips to help you meet demands while you're scaling your business.
1. First off: All hands on deck.
Hire more workers if you need extra help scaling. In order to truly grow your operations, you'll need people to execute those plans.
2. If you don't have space onsite to store more inventory, box up more orders, or handle mailing them out, look into third-party logistics (also called 3PL).
You can rent warehouse space and hire off site workers (see tip #1) to do the packing and shipping, sometimes all at one facility. As a small business owner, you're probably looking to save money, so look for 3PL opportunities that offer partial truckload shipping (also called LTL, for Less Than Load). If you're concerned about having enough liquid capital to handle the ebb cycles of your cash flow, look into your financing opportunities (more on this below).
3. When it comes to managing lead times, your supplier relationships are crucial.
Open the communication channels. Let them know what you're seeing in terms of product demand. Ask them about their own supply chains. If their own sourcing is limited and you aren't aware of it, they may be able to handle your current orders, but not more. What if you need to find additional suppliers, rethink your product lines, partner with another retailer, or find some other creative way to handle customer demand? You won't know unless you ask. And you'll definitely want to know. Good supplier relationships are half of strategic sourcing.
4. Post-sales customer relationship management is equally important.
Make sure to keep an eye on how well you're delivering on your products and services. Remember that your business isn't just about what you sell, it's also about how you sell it. Having enough product to deliver is important, and having enough staff to deliver it seamlessly is just as important. If you have a brick-and-mortar business, you'll be able to see and solicit customer reactions in person. For ecommerce sales, consider implementing a quick, simple survey at the end of each purchase process, if you don't already -- Square's is visually appealing and fast for customers to complete. And keep an eye on your Yelp reviews; customers are quick to voice dissatisfaction, and "They were out of the thing I wanted to buy" reviews are not uncommon.
5. Relatedly, don't forget the inventory analytics.
Small businesses in flux benefit from as much information as possible. A few sub-tips here make sure your knowledge is as complete as possible:
- Track customer demand in your inventory management system
- Properly classify all inventory in the system
- Do a full physical inventory to make sure the numbers on the floor match the numbers in the system
- Make a plan for your overstock, and for products that will go obsolete
Once you're confident in the inventory numbers, you'll be better able to track them and understand what they mean for the bigger picture of your potentially changing business model.
6. The impact of how you manage your supply chain on what happens to your business model.
Regarding the impact of how you manage your supply chain on what happens to your business model, it can help to read some case studies about your industry to get supply chain management ideas that are specific to your company. Ideally you'd be able to learn from small businesses like yours (what a windfall of information if you are able to dig deep on a direct competitor!). But to a certain extent, it might not matter if the case studies you read are discussing large corporations with global supply chains; you may be able to scale down their practices to suit your needs. There's always something to learn from other companies' histories.
7. Increased demand for inventory means an evolving cash flow.
This period of rapid growth might involve spending more money as you deal with scaling the business's supply chain costs. However, take care that you're not just throwing money at problems -- the goal is to spend strategically. If you're concerned about access to liquid capital, you can explore your funding options: maybe a real estate loan to expand your physical location, an equipment loan to help boost your production capacity, or a line of credit to cover general growth expenditures. Biz2Credit has a number of funding options, and a lot of information to help you decide how to handle your capital needs.
Handling your supply chain while your business is growing fast presents a lot of new opportunities to streamline your processes. Keeping an eye on the operational context of your supply chain -- having enough workers, logistical help, funding, and clear communication with both suppliers and customers, as well as solid information about your inventory itself -- can help ease this transition and position your small business for success.
By Chaia Milstein, Biz2Credit Chaia is the Editorial Manager at Biz2Credit, a company that matches small businesses with the funding they need to grow and thrive.