Creating and maintaining an effective supply chain is fundamental to the success of your business. Here we look at why your supply chain is so crucial to the profitability of your small business and how to build and manage a successful supply chain.
How to Create and Manage a Successful Supply Chain
Whatever industry you work within, your business will have a supply chain of some type. Whether this brings in products or materials or labour and services. On the other side of the supply chain you deliver your products or services to your clients. Your business typically sits within the centre of this process, or towards the end in the case of most retailers.
Logistical Planning for a Successful Supply Chain
Your supply chain relies on good logistical planning. This is what helps the stages of your supply chain to work together effectively. The more effective your supply chain, the more profitable your business will be. Here you want to look at using suppliers that sit both within your own ethical policies, and within your geographical region if you are transporting goods or materials. You will need to calculate the cost of quality, versus efficiency, versus effectiveness. You also need to think about how using certain suppliers can affect the message of your brand.
Why Supply Chain Management is Important
Supply chain management is the process of setting up and then maintaining the various stages of your supply chain, so that they work together as effectively as possible. Managing your supply chain efficiently will give you the advantage over your competitors. Perhaps you can deliver more swiftly than your competitors. Or perhaps you can increase your profit margin with a cost effective supply chain. Perhaps this means only working with clients who are local to you to cut down your travel costs if you require face to face meetings.
How to Create a Good Supply Chain
Your first task is to define the needs of your supply chain. More than simply raw materials, consider your priorities and where you sit within your market. What is most important to you and your clients? Speed, quality, choice or something else? Estimate your output, if you are planning to grow your business you may need flexible contracts with your suppliers. Map your requirements using a cash flow forecast. Aim to build reliable relationships with every partner within your supply chain. Furthermore, try to understand the business model of your partners – imagine you receive a huge order only to discover that your supplier can’t possibly fulfil the order in time. Try to know how much notice to give and most of all maintain excellent communication with your clients.
One of your most important considerations is cost. Depending on your industry you should have a feel for how much your supplies should cost. However it’s important to research your options. Perhaps there are bulk discounts to take advantage of, but you need to consider storage options or perishability. Perhaps the lowest cost supplier isn’t high enough quality for your output. Once again a cash flow forecast can help you calculate your margins and make the best decision.
Just as important but often invisible – until it goes wrong, is the value of dependability and continuity with a successful supply chain. You want to build good relationships with your partners, however it makes good business sense to have an awareness of alternative suppliers, should anything go wrong at the last minute.
Maintaining a Successful Supply Chain
When you have your supply chain up and running you will need to continue maintaining the relationships you have with every stage of your chain. Keep in touch with your partners. Understand the way they work and what lead time they require for large orders. Have an understanding of what factors affect your suppliers, this could be adverse weather affecting crops or overseas delivery, or strikes affecting your supply chain. If your business requires venue hire, consider rises in cost during busy seasons. Try to preempt problems and keep communicating with your supply chain and your clients. Further to this, continue to negotiate good rates and use your reliability as leverage. A successful supply chain should be a dynamic structure that responds to change and growth.
At Prestige Business Management we can help your Business
At Prestige Business Management we can help you understand and manage your business development and accounting. Find out what we can do for you. Call us today on 0203 773 2927.