In the United States, around 20% of small businesses fail within the first year. This stems from a variety of causes, such as mismanaging finances or poor marketing.
However, a major reason behind this occurrence is supply chain problems. This can substantially impact your inventory management, product supply, and inventory velocity.
The good news is there’s no shortage of ways you can improve your supply chain. Using this appropriately can help take your company’s performance to the next level. Let’s explore some of the most notable that you should consider.
1. Use a Domestic Supplier
This is one of the most important tips to keep in mind when moving forward. Working with a domestic supplier ensures you’re familiar with the relevant laws and regulations. For example, imagine the nuances associated with international suppliers.
Foreign laws can be difficult to navigate, and infringing upon them can come with major consequences. Ignorance of international laws won’t absolve you from blame, either.
Domestic suppliers are also easier to get in touch with than foreign companies. This provides added convenience that you won’t be able to achieve otherwise.
2. Increase Order Frequency
Some companies make the mistake of placing a single bulk order and assuming it’s the most cost-efficient option. While this is true in many cases, it’s not always the best choice. To elaborate, bulk orders could result in longer lead times.
This comes with opportunity costs in the form of missed sales and opportunities. You should conduct a comprehensive cost analysis to determine how much money you’re saving. Chances are you’ll be surprised by the result.
3. Provide Sales Forecasts
Inform your supplier of your sales forecasts. This involves using sales data to illustrate when you can expect reorders for your business. From here, they can anticipate your needs and make sure they’re able to accommodate them.
It’s not uncommon for suppliers to get into a rhythm where they have materials on standby until you need them. Scenarios like this lay the groundwork for optimum efficiency.
However, your sales forecasts need to be as accurate as possible. Providing your supplier with misinformation can lead to extra costs and inconvenience.
4. Convert to Standard Components
This step is a bit more complex than the others, but it’s one of the most useful. Standard component conversion allows you to develop customized solutions that meet unique needs.
You’ll also save time on engineering, and you can invest this time in other areas of your business. It’s best to find a supplier that can seamlessly collaborate with your designers so they can fine-tune the overall design.
They’ll provide insight into required changes and make them without sacrificing quality or performance. In some cases, it’s worth switching suppliers if your current one isn’t a good match with your design team.
5. Consolidate Suppliers
The fewer suppliers you work with, the easier it will be to manage these relationships. Consolidating is particularly effective if you work with many suppliers concurrently.
Situations like this often lead to major complications, such as not hearing back from one of your suppliers in time. There’s also something to be said about the peace of mind associated with handling fewer accounts. It’s also recommended to integrate vendor management software.
Doing so allows you to quickly handle all of your vendor accounts from a single interface. Not only does this save time, but it also reduces the chance of error.
Read Also: 5 Things You Should Know About Mergers And Acquisitions
6. Consider Kitting Services
Many people overlook how useful it can be to use kitting services. This involves grouping different components in batches to keep workers organized. In context, it allows them to quickly locate and obtain the product stock they need for their projects.
Workers won’t have to count individual parts, streamlining their workflow. This also improves employee morale, which comes with many benefits on its own. For instance, workers who are satisfied with their roles are less likely to look for other jobs.
They’re also more prone to reaching peak performance. You’ll need to conduct a proper workflow analysis before you implement kitting.
This involves having a comprehensive understanding of what your workers need to complete their tasks. Even a minor oversight with your team can derail the entire process.
7. Create Incentives
You’ll likely find yourself in situations where your supplier’s timeline is just outside your needs. You can offer them incentives to encourage a higher level of efficiency. For example, your supplier might not be able to handle your project in fewer than 16 weeks.
However, you have a hard deadline of 12 weeks. You could offer to pay them more money if they’re able to help you meet your goals. You could also agree to certain contract terms if paying more money is out of the question.
It’s worth noting that some suppliers will be more negotiable than others. You won’t always be able to get yours to agree to your terms at first. With enough discourse, though, you shouldn’t have an issue getting the results you desire.
8. Communicate
The more you communicate with your supplier throughout the production process, the fewer problems you’ll encounter. This allows them to provide key performance indicators that offer insight into important details.
This data can help justify the money you spend working with the supplier. It’s also recommended to reach out to them as soon as issues arise. Waiting too long could cause issues to evolve into something far more serious.
These can be difficult or even impossible to handle on your own. Proper communication is essential for proper asset management, as well. You won’t be able to handle your assets correctly if your supplier can’t provide the right materials.
Optimize Your Supply Chain
The info in this guide will help you take your company’s performance to the next level. It will also allow you to overcome pitfalls you may have otherwise encountered. From here, you’ll have no trouble hitting your target metrics.
Want to learn more information on how to run a business more effectively? Our blog has plenty of articles like this one. Be sure to check them out today!
