No business can exist without a working supply chain — but many dream-driven entrepreneurs aren’t thinking about the complex interchange required of suppliers, producers, and sellers when they are first developing their business models. This is why supply chain managers are paid such significant salaries: Their jobs are technical and difficult, and many entrepreneurs don’t have the skills necessary to get supply chain management right.
Fortunately, effective supply chain management doesn’t have to carve a huge chunk out of the entrepreneurial budget. Here are a few tips for getting better at managing your own supply chain, so you can have a firmer handle on your business.
Know What Suppliers Best Serve Your Business
Just because a supplier offers the goods, your business needs doesn’t mean that supplier is inherently right for your business. Before you begin searching for suppliers, you should take note of the exact specifications of your desired products, and you should also list out desired qualities of your ideal suppliers. Then, you should differentiate the qualities that are most important to your business from those that are secondary.
Because suppliers are businesses, and businesses are subject to both change and catastrophe, it is a good idea to find multiple suppliers for each product your business requires. This will prevent a total lapse in delivery, ensuring that your business is prepared for possible worst-case-scenarios in terms of supply disruption. You might also make use of tools for supply chain risk management to keep your multiple suppliers organized and in line.
Communicate With Your Suppliers Regularly
Just as you wouldn’t let your marketing firm function without oversight, you shouldn’t allow your suppliers to forget about you. Keeping in contact with your suppliers helps you form a better relationship and build trust, which can lower your costs and improve your product. Frequent communication also makes it less likely that either party will surprise the other with a sudden revelation, like a huge order required immediately or a change in product materials or style. You might schedule bi-monthly meetings with your suppliers to discuss your upcoming plans, so everyone can stay in the loop.
Don’t Overreact at Small Supply Mistakes
Suppliers are bound to make mistakes. Like any business, they are trying to keep many balls in the air, and sometimes, a ball momentarily touches the ground. As long as your supplier recognizes the issue and works to resolve it, you should have no reason to make outrageous demands or end your relationship with the supplier. Creating hardship for your supplier is bad for business; instead, you should be lenient more often than not and reap the benefits of loyalty and trust.
Always Negotiate Pricing
Once you have good standing with a few suppliers, you should start to negotiate pricing during annual reviews. Because your suppliers are benefiting from your constant business — and from your regular communication, which keeps their schedules secure — you have a firm foundation to request a deduction in price and perhaps even obtain preferential treatment in other services.
To assist with your negotiations, you might consider placing ongoing orders from your suppliers. Large stock orders of goods you regularly need will show your commitment to certain suppliers and deepen your relationship with them. Plus, a flow of supplies can keep your business humming productively.
Set Supplier Expectations, Especially Across Cultures
Globalization gives your business access to more affordable suppliers operating out of different countries. For as many benefits as an international supply chain brings — in terms of price, efficiency, quality, and more — it also brings headaches in managing relationships across cultures. If you are going to do business with a supplier of a different culture, you might devote more time and energy upfront to understanding their expectations and explaining yours. This will smooth any potential bumps in communication down the road.
Be Patient With Long Sales Cycles
Tapping into supply chains takes time. You shouldn’t expect a new relationship with a supplier to deliver exactly the goods you seek in days or weeks; many experienced business leaders understand that sales cycles often require waiting one or even two years before they will receive their first commercial order. To sustain your business in the interim, you might need to get creative with your business financing, perhaps seeking contracts or investments from customers, banks, private investors, and others.
Your supply chain is one of the most important elements of your business, so setting it up requires more than a cursory glance. By giving your suppliers your time and energy, you will receive what your business needs to thrive.
