As a small business owner, it is important to understand the importance of the supply chain when it comes to inventory management and business strategy. If you have an efficient supply chain, it can help you save money and improve customer satisfaction. On the other hand, if your supply chain is not efficient, it can drain your resources. This means that you must take steps whenever possible to improve your small business supply chain, which can improve your chances of being successful.
If your business is located in Southeast Wisconsin, Nolan Accounting can help you manage your finances and ultimately, your supply chain. We can help you manage your daily accounting and bookkeeping tasks, payroll, and tax prep.
In this article, we’ll help you understand some of the ways that you can work to improve your small business supply chain.
4 Tips to Improve Small Business Supply Chain
Take time to evaluate your suppliers
Since your supply chain starts with your suppliers, the very first thing you must do is evaluate your relationships with your suppliers. There are three things to consider:
If you don’t have a good line of communication with your suppliers, your relationship is doomed. Therefore, take the time to evaluate your communications. Does the supplier answer your emails quickly? Do you understand each other, or do you spend a lot of time re-explaining yourself repeatedly? A good supplier will be responsive. If you have a supplier that is not, you might want to consider finding someone else to work with.
Your suppliers must be reliable at all times. If you have a supplier that is always shipping late, shorting you on your purchase orders, or failing to follow through on any of their other promises, it can have a negative impact on your supply chain. They are a liability, not an asset. If you have a supplier that you cannot depend on, it may be time to find a different supplier.
Finally, consider how long it takes your suppliers to fulfill your orders. If you have a supplier that takes several weeks to complete your order, you have to order early to avoid running out. This adds an additional risk if your planning is off. In order to maximize the efficiency of your small business supply chain, think about how long it takes suppliers to ship orders once they’re ready. If you are only ordering small quantities at a time, you may want to find a local vendor, so you don’t have to be concerned about long lead times.
Consider analyzing your strategy
A successful supply chain has three characteristics:
Therefore, if you want to keep your costs low and your process reliable, spend some time analyzing your strategy and goals. A few factors to consider:
- Does my strategy work well for my business type?
- Am I utilizing third-party logistics providers in the best way?
- Is my strategy resilient?
Learn to utilize demand planning
Demand planning, or stocking your shelves according to customer demand, is an effective way to improve your small business supply chain. For example, if you know that you will sell a lot of red, white, and blue sunglasses in June, July, and November, you will want to work with your vendors to make sure that you have enough supply to meet your customer demand.
Another aspect of good management of your supply chain is planning around your suppliers and their location. For example, if you have a vendor in China, you will want to make sure that you consider things like Chinese New Year when ordering your products so that you get them on time.
Regularly evaluate your system
Many times, a small business supply chain system may work well for a long time, and then one day, it no longer makes sense. A good supply chain professional understands this and regularly evaluates the key components of the supply chain to determine where it is weak. One of the best ways to identify issues is to utilize an inventory management system that includes logistics and supplier management platforms. However, you can also find problems manually and implement solutions.
Take the time to examine the performance of your supply chain at least one every quarter to find any patterns. If you notice that you’ve had an increase in product quality, unfulfilled orders, late shipments, determine if it’s the supplier, the shipper, or issues with warehouse handling. When you find the problem, you can implement a solution.
You Can Improve Your Small Business Supply Chain
If you’re not happy with the current performance of your small business supply chain, there are some things you can do. However, it’s not going to happen overnight, it will take some time, and at some point, you may have to re-evaluate what you’re doing and make changes again.
If you need help evaluating your finances and determining where your supply chain is falling short, contact the professionals at Nolan Accounting. We work with businesses in Southeast Wisconsin, handling daily accounting and bookkeeping tasks, payroll, and tax prep.