Mar 4, 2020
Tips for supply chain startups to get you on the right track.
Starting a new business, especially in today’s very competitive landscape, comes with some serious challenges. Most often, it’s the small and basic tasks and activities that, if not done or not done correctly, can make or break the business. With our combined years of experience here at NETSTOCK (developers of Sage Inventory Advisor), we have jotted down a few tips that we believe form the building blocks for start-ups in a supply chain business.
Start with the end in mind
Think about where you want your business to be in 10,15 or even 20 years from now. Having a clear picture of where you want to be, gives you focus, and makes your day to day tasks and activities easier to align your journey. Be proactive and steadfast in your approach, and always have your result in mind. Each time you find yourself having to make a decision, ask yourself this simple question: “Will doing this get me to my ultimate goal”?. If the answer is No, then you probably shouldn’t do it.
Be careful whom you get into business with
When you are starting, it’s very tempting to take ANY interest from suppliers or investors to heart and to get into bed with whatever comes your way. Don’t be desperate – rather, shop around and see what else is out there. There’s no rush, so engage with other suppliers and don’t settle for the first one that comes your way. The time that you spend reviewing multiple proposals will optimize your commercial outcome in the end. You also want your suppliers to share YOUR company’s vision, so make sure that you spend time on this with potential suppliers. You want to develop a healthy relationship with your suppliers, so they need to be as excited about your business as you are. Engaging with the right suppliers will ensure a speedier, efficient, and more cost-effective entrance into the market.
When you start your business, avoid getting into long term contracts until you have established your products and volumes and are sure about your relationship with the supplier moving forward. Enter into project-based agreements instead of long term contracts. Short-term contracts are a great way to build trust for both parties and lays a solid foundation for ongoing business relationships.
Insist on full transparency with your chosen suppliers. Naturally, you have no control over their business, but it’s essential to know if they are having problems as this may have a direct effect on your business, and you need to be prepared to adjust if necessary.
IT infrastructure investment
Data is the fuel that powers the 4th Industrial revolution. As a start-up, you can take advantage of all the new hi-tech solutions that are available and spearhead digital adoption in the industry. You are at a considerable advantage in terms of technology. Many of the existing players are stuck with old tech and disparate systems. Since it’s a substantial investment to update, a lot of them are still fumbling about with legacy systems. IoT technology can provide relevant and real-time data, Blockchain, and Cloud Computing that can streamline all your processes across the supply chain with transparency and visibility. If you invest in sound technology and cloud solutions – you won’t be sorry.
However, you don’t want to be a beta tester for some brand new solution, as this tends to take a lot of time and potential disruptions for the business. Rather opt for something that is modern, but has a sound reputation. You will have up-to-date technology, and that technology will be stable and give you a return on your investment.
Initially, you won’t have any point of reference or historical data to fall back on and will need to use your intuition and market research to order your first batch of products. However, as you grow, it’s essential that you invest in a sound inventory management system that uses algorithms to predict inventory needs and enables smart demand forecasting. You don’t want to end up with a warehouse full of products that you can’t sell. So, for new businesses, start small and scale up as your demand increases. Stock the items you know will move and take your chances on riskier items later when your business is in a better financial position to do so.
If local and global shipping is part of your operation, invest in a sound transportation management system. This will help you to improve your warehouse efficiency and your customer service. Look at warehousing systems, connected IoT devices and sensors (depending on your operation) and any other technology that will simplify your processes and give you full visibility, reporting & analytics. You want to have a complete 360′ digital operation – and this does not have to cost you a small fortune, the SaaS solutions out there are very affordable.
It’s all about the people and your relationships (staff, stakeholders, suppliers, and customers)
At the end of the day, products and services are all very similar in features, functionality, and cost. You may get some with slightly more features and slightly less in price, but in the end, it’s all much of a muchness. What sets companies apart are their people. So, when you are recruiting your employees, take this into account. If you are looking for sales, admin, or marketing staff – hire for personality and train for skills. If, however, you are looking for an operational or IT person, you should hire for skills or hire the right type of personality style for this function, someone with an analytical & logical mind. From your receptionist as the face of your company to your admin, store workers, drivers, etc. you want to select people that are positive, energetic, results-driven, and passionate about their careers.
Aim to create a working environment that will attract the right people. Of course, employees want a cheque at the end of each month, and they want benefits, sick and annual leave, etc. BUT today’s millennials want more from their working environment and employees than previous generations. Millennials want to be working for companies that care about our world and the people in it just as much, if not more, than they care about the bottom line. The new-age employee is not that focused on climbing the corporate ladder. They are happy with lateral growth as long as they are continually learning and growing; they don’t necessarily feel the need to be promoted to new positions. They want a positive work environment where team collaboration is of utmost importance, and they want to be involved with building, maintaining, and contributing to the company culture. Millennials are always connected to their work and require employers to be flexible with traditional hours of work. They may be up at 4 am hammering away on a project or working all weekend. If they are productive and delivering excellent quality work, does it matter if they are working off some beach in the Bahamas or still in their PJ’s at 10h00? They want the freedom to be innovative and to test new ideas, and they want to work for companies that embrace this.
It’s all about your VALUE proposition
Analyze your offering and decide what makes you unique and what sets you apart from your competitors. It could simply be offering a superior customer experience and service. Service levels in many countries are much to be desired, and providing a good one could be all that is needed to set you apart. Remember, though – you need to show proof of value – you need to walk the walk, not only talk the talk.
The customer is always right – or are they?
Sure, the customer is King and pays our salaries, BUT they are not always right, and in some instances, you may be better off without them. I hear you gasp at this statement. Of course, you must try to make every interaction with every customer a priority, but some clients are impossible to deal with and end up making you and your employees’ lives a living nightmare. Look at the numbers. Is it worth the angst to keep this customer? Sometimes firing a customer is the best thing you can do for your business, and it shows your staff that THEY are more important to you than it always being about the customer.
The supply chain landscape is highly competitive, so you need to arm yourself with a solid business and marketing plan. As long as you focus on your end game and are prepared to put in the blood, sweat, and tears to go the distance, you will have every chance of success.