For small businesses, logistics and the work of getting products to consumers can get expensive.
Hidden costs and inefficiencies can drive these prices even higher — unnecessarily making it hard to get the best supply chain services for the money your business has.
Even small businesses can benefit significantly from finding these inefficiencies and solving them with changes in how they ship goods or procure raw materials.
With an audit of your supply chain process, you ensure that common supply chain issues don’t cut into your profit.
1. Start With the Big Picture
The best place to begin your audit is with mapping out your entire supply chain — documenting, as much as you can, every process, facility and business involved in getting goods to consumers.
Review the movement of essential business goods both on a large scale and on a small one. This means both macro movements — supplier to warehouse to consumer — and micro ones, like the movement of a package around a warehouse, mail room or office.
For example, one product may start in a factory, then move to a manufacturer’s warehouse. From there, it may be transferred to a retailer’s warehouse before eventually being distributed to various stores.
Keeping track of how products move from manufacturing to consumers will help you break down overall shipping costs into more manageable, easy-to-analyze groupings. It will also help you visualize how goods flow from supplier to customer — letting you know which suppliers and facilities are the most essential to your business.
Another may start with raw materials shipped to one of your business’s factories or facilities. There, a team will assemble the raw materials into finished products, package them, and ship them directly to customers.
When mapping your supply chain, you should avoid common supply chain mapping pitfalls — like forgetting about tier 2 or tier Three suppliers, or these companies that present the sources your major suppliers rely upon.
In case you use provide chain administration expertise, take inventory of it and observe the way it’s used.
2. Audit Your Suppliers
For small companies, suppliers are possible some of the necessary elements of your provide chain.
After you have a tough define of your enterprise’s total provide chain, you’ll wish to take inventory of the suppliers you’re employed with.
This course of might help you determine suppliers which are working nicely for your enterprise — and make it easier to discover new ones that line up along with your firm values. For instance, a meals and beverage producer that’s large on sustainability and moral sourcing might use an audit to discover a cacao provider that operates in accordance with these values.
It’s best to rigorously contemplate the suppliers you select to work with — but in addition be cautious about switching from provider to provider every time it’s handy. On the whole, it’s higher to have long-standing relationships along with your suppliers. Whenever you work with the identical provider, they’re extra possible to think about your success as their success, too — that means they could be extra fascinated by offering recommendation, prioritizing your orders or . . .
Sturdy provider relationships also can make it easier to with strategic sourcing — suppliers with robust market information might be able to make it easier to discover the very best supply for a selected product or uncooked materials.
Which means that, slightly than simply selecting the provider that gives the bottom worth or quickest turnaround time, chances are you’ll as a substitute deal with constructing relationships with previous suppliers that your enterprise has discovered dependable.
Some small companies are reluctant to deal with constructing relationships with their suppliers, as a result of they could consider that their small dimension will result in them being missed in favor of bigger purchasers.
Nevertheless, even the smallest companies can construct efficient and reciprocal relationships with massive suppliers, that are sometimes on the lookout for purchasers of various sizes, niches and strengths.
3. Assessment In-Home Packaging Processes
Some small companies outsource a lot of their packaging work. For individuals who maintain even a small little bit of the packaging course of in-house, nevertheless, a course of evaluate might be important.
It’s because small inefficiencies in how your packages are put collectively can have a significant affect in your total logistics bills.
For instance, it’s not unusual for points with an outdated bundle strapping machine or poorly configured conveyor belt system to slow down the entire packing process and make it considerably much less dependable.
With a easy tools improve and alter to conveyor format, a enterprise is usually capable of make vital enhancements to efficiency and reliability — however provided that they find out about these issues and their causes.
The same technique of reviewing your processes and on the lookout for potential areas of enchancment might help you construct a less expensive and environment friendly inside packaging workflow.
4. Establish Metrics and KPIs to Measure Provide Chain Success
When you’ve began to grasp what your provide chain appears to be like like, you possibly can determine metrics and KPIs that can make it easier to proceed monitoring your provide chain into the longer term.
For instance, for those who’re involved about the price of your provide chain operations, then a KPI like cash-to-cycle time or gross margin return on investment (GMROI) will make it easier to observe the timeliness and price of your shipments on common.
Breaking down these KPIs by provider, product phase or area of interest might assist present much more perception into the efficiency of your provide chain. This might help you determine inefficiencies or issues along with your provide chain down the road.
Optimizing Your Small Enterprise Provide Chain
Easy modifications to how your small enterprise handles logistics can have a significant affect on revenue and transport prices.
Mapping your provide chain will make it easier to develop a full understanding of how your enterprise and the suppliers you’re employed with transfer items to prospects. It’ll additionally make it easier to evaluate inside transport processes and evaluate the suppliers you’re employed with.
This data might help you proceed to optimize provide chain operations and construct robust provider relationships nicely into the longer term.
Eleanor Hecks is editor-in-chief at Designerly Magazine. She was the artistic director at a digital advertising and marketing company earlier than changing into a full-time freelance designer. Eleanor lives in Philly along with her husband and pup, Bear.