Ineffectively managing your supply chain can result in serious losses for your small business. It could cause you to lose money and customers for the following reasons: poor inventory management, a missed delivery date and/or fulfillment issues (the closing of a business transaction between the business and the customer and everything that happens in between). In order to protect your small business, here are some dos and don’ts for maximizing supply chain efficiency:
- Do enlist other departments outside of procurement, such as engineering, operations, quality, accounting, in major supply chain management decisions.
- Do consider sourcing locally, if your small business has a global reach. This is possible not only with food-based businesses but with any business that relies on locally made products. Just be sure that you research their reliability, quality control and production schedules.
- Do be flexible with your schedule if you use local artisans and you may have to pay cash up front so that they can buy materials.
- Do make a contingency plan for emergencies by engaging back-up suppliers who boast a quick turn-around.
- Do practice accurate and detailed sales forecasting to ensure that your inventory costs are under tight control.
- Don’t neglect your taxes or you may cut into your profits by as much as 25 percent. Hire a consultant who can help you sort it all out.
- Don’t ignore your supply chain when it comes to sustainability. You don’t want to be impacted by environmental issues or human rights violations of your suppliers.
- Don’t lose touch with your middlemen or brokers, particularly if you don’t have the budget for automated supply chain technology. Try to see these contacts in person periodically throughout the year and maintain regular phone and e-mail contact.
- Don’t expect to find one software vendor for supply chain planning and supply chain execution. The most well-known vendors usually fall into one or the other category.
- Don’t forget to assess risk at all points in the supply chain – this includes product and service providers, governments and local communities.
Supply chain management may not be the most exciting part of your small business. However, it can have a significant and far-reaching impact on thequality of your products, the reliability of your deliveries and the ultimate success of your company.