“Everyone is in the business of supply chain, even if they don’t realize it,” Syama Meagher explained in one of our recent small business webinars. Meagher is the founder and CEO of Scaling Retail, a consultancy that channels her 15-year career in retail into advising businesses of all sizes. She has clients adjust their thinking of supply chain to go beyond selecting which carriers will ship their goods. Instead, they should think about how their goals will dictate which business functions and partners they’ll work with. Meagher advised our community to think about the key performance indicators (KPIs) they want their businesses to hit within five years and then build the supply chain and related operations to reach them.
She reminded us that the time to start thinking about next steps is as soon as you make a sale to someone who isn’t a friend or family member. “The moment you start to get some initial feedback: that is the moment that you have to, ‘go, holy crap, who am I going to hire and work with to actually get myself to the next level?” Meagher offered invaluable insight into vetting supply chain partners, handling issues as they arise and more.
Network to find partners.
Sourcing partners like warehouses, manufacturers and third-party logistics (3PL) companies can be especially tough for new businesses, or for entrepreneurs new to a specific industry. “Some of the best manufacturers don’t even have an online presence, because it’s not their job to be retail or consumer facing,” Meagher explained. This is why it’s key to have a network of entrepreneurs who can point you in the direction of reliable partners. Online small business owner groups can be a great way to find them.
Of course, even with a recommendation from someone you trust, you’ll have to have your own vetting process, one that helps you determine whether this partner can help you grow and scale over time. Have they worked with businesses in your industry or ones as small as yours before? What are the termination clauses? “You don’t want to get caught into a 3PL agreement that’s going to keep you stuck with them for 12 months with an exclusive clause,” Meagher explained. The smallest businesses often don’t have barcodes at first, and many 3PLs don’t accommodate businesses that small. On the other hand, you want to have the flexibility to grow–and that may mean outgrowing a particular manufacturer as your customers’ demand increases, for example. Look for suppliers who can grow with you as your business increases.
Everyone is in the business of supply chain, even if they don’t realize it.
Don’t forget this KPI.
You’ve secured the manufacturing and shipping company, and you’ve started tracking their turnaround times and other KPIs to measure their performance. But there’s one metric Meagher says many new entrepreneurs forget to look at when assessing their operations: customer service. “Customer service is one of the most important things, especially in today’s market, that most people do not spend enough time focusing on, because they’re looking at things like production, or marketing.” Your customers’ satisfaction is key to your revenue, and understanding their problems can help you reevaluate your supply chain partners. Are customers’ packages falling apart in the mail? Are their orders constantly late?
Shape your supply chain to increase revenue.
Once you’ve established relationships with partners you feel good about, you should think about owning parts of the supply chain to generate more revenue, Meagher counseled. You may even use your ownership to help other small business owners. “There is a shortage of third-party logistics centers that are actually geared towards small business. Maybe there’s an opportunity for you to own a logistics and warehousing company to provide a service to smaller companies who are looking for a high-touch experience, but can’t afford the overhead of a larger 3PL,” she suggested. Another idea she offered: buying the building your storefront is in and paying yourself rent.
Meagher also recommended that more established small businesses think about partnering with their manufacturers, for example, to create a new line of products. Bringing your own network and expertise to this particular relationship can even help you as you negotiate different terms on your supplier agreement. Again, it becomes a question of having a strong relationship in place with your supply chain partners. Meagher said business owners should think, “How am I able to create a revenue model and a business model that benefits everybody? At the end of the day, we’re building a family.”
Troubleshooting supply chain issues.
Of course, things happen. The process from idea to final delivery is rarely ever seamless. Having trouble getting started because of cash flow? Meagher shared how she’s confronted that issue in the past. “So when I get on the phone, and I have no money, I say, ‘I have no money, and this is my vision. And I understand how much you charge and I understand your value. And I would very much like to pay that, but I can’t. And so what might you be able to do for me so that we can start to build this relationship to hopefully get me to a place where I can.’” This candid approach can be the beginning of a relationship with a supply chain partner that truly supports your vision.
She added that a part of success with your partners is having a backup plan, such as a second manufacturer working on your products. Meagher recommends that business owners constantly evaluate their relationships and contracts, and by doing that, they may find a plan B that helps them out of a sticky situation. “I would have you or your production manager go and shop for manufacturing and also do another round of searches for 3PLs. Do a partnership refresh.”
When asked what to do about quality control, where products arrive damaged (or don’t arrive at all), Meagher stressed the importance of entrepreneurs knowing their rights. “Basically, your manufacturer owns the good until you have the goods. You do not actually own the product until it arrives to you. When you open it, then that becomes under your purview.” If there’s a problem, call the manufacturer immediately. You likely won’t get a refund, but there’s a good chance you can get a credit toward future services.
That being said, manufacturing or shipping delays are part of being in business. Meagher advised our community to be transparent in those instances. “Never feel ashamed of things being delayed from your manufacturer,” she said. “Communicate with your email list or use social media to let people know what’s going on.” Honesty with your suppliers and your customers are essential for small business owners.