Small business owners have a lot on their plates. You may be dealing with multiple aspects of your business that bigger companies devote entire departments to, and if you’re like most people, you might find the supply chain aspect intimidating. Here are some top tips for tackling the biggest supply chain concerns among small business owners.
Do you know, with absolute certainty, how much of each product you have, where it is, how much it’s costing you, and its condition? If not, you’re probably spending more money than necessary to run your business.
After all, if your inventory is insufficient, you won’t be able to meet the needs of your customers, so you’re either leaving some money on the table or cutting into your profits by spending money on express shipping fees. And on the other hand, if you’ve got too much inventory, you’ve already spent more money than you needed to, and you’ve also got to pay to store all of that extra inventory.
Worst of all, not knowing if you have too much or not enough could mean you end up buying some inventory that you already have. It might also cause you to be unable to ship an order to a customer that you initially promised you could – either way, it’s far from ideal.
The solution to this is carrying out yearly physical inventory counts as well as regular cycle counts. They must be done carefully and consistently, or it’s not worth doing them at all.
Lead Time Management
You need a solid understanding of lead times if you want control over your supply chain. When a supplier gives you a lead time, you need to know exactly what they’re referring to; a lead time could be how long it takes them to make the part, how long it takes them to procure the materials and make the part combined, or some other definition, and you also need to know if the shipping time is included. It’s a complication that could easily be avoided by asking all of the right questions up front.
By the same token, you need to take everything into consideration when supplying your customers with a lead time, being sure to include all your supplier lead times as well as internal receiving, inspections, production and shipping.
Supply chains have a lot of facets, but these are two big areas where proper attention can make your job a lot easier.
This blog post was based off of an article by The Balance Small Business. Read the full article here.