Overcoming Supply Chain Stress : Some Tips From The Experts
Since the pandemic’s arrival, shifting lockdowns and border closures – among other challenges – have wreaked havoc on global supply and distribution chains. And small businesses are feeling the effects. In this series, we speak to experts in different industries to learn how they’ve managed the disruption, and what advice they have for others feeling the shipping squeeze.
Supply chain chaos has forced many small businesses to rethink how they manage logistics, from sourcing materials and manufacturing to storage and distribution.
Here are his tips to help small businesses manage their supply chain:
Consider your customers’ expectations: How important are fast deliveries for your customers? If it’s something they value, moving your inventory closer to your customer base using a 3PL could be the right investment to meet their needs.
Try Click and Collect: This is a form of micro-warehousing with a store being used to distribute stock, and can be a fast and effective way to fulfil customer orders. It’s important to remember there’s a bit of set up involved to ensure you have the inventory to sell and that it’s (as well as your customers) within the same day delivery zones and timeframes.
Know when to start outsourcing operations: Of course, 3PL isn’t for everyone – especially micro retailers that can manage fulfilment themselves. 100 or more orders a month is often the starting point to consider using a 3PL because it may save you a significant amount of money and time that could be better invested elsewhere.
Forensically model your costs: 3PL quotes are hard to compare, as some will have lower warehousing fees but higher freight rates, and vice versa. So instead of trying to weigh up rate cards on paper, model your costs for the next 12 months – including expected stock levels and order volumes – then do the maths to find the best value solution for your business.
Don’t default to the cheapest option: You need to gel with your 3PL provider as they’re effectively a part of your core team. With that in mind, don’t skimp on the investment. Instead, take time to interview candidates to understand their culture and mindset. Your busiest times are when you rely on your 3PL the most, so you’ll want them to perform (and value your business) when the pressure is on.
Consult an expert: A big part of my role is sourcing quotes for small and medium business operators, running the numbers, and negotiating with 3PL providers to find the right fit for my clients. It pays to outsource this to someone who knows the industry – it’s a small investment for long-term financial gain.
Manufacturing specialist products overseas is a reality for many small business owners, such as Diana Swadling. Diana is the founder of Milkbar, a family-owned and operated ecommerce company that imports some of its high-quality breast pumps from China. Since early 2020, the pandemic has caused major logistical obstacles for Milkbar – both internationally and on local shores. “Every step of the way, there’s been delays,” Diana says. But despite the disruption, she’s learnt a few tricks of the trade that any small business owner importing goods can learn from:
Consult a freight forwarder: Leveraging the knowledge of a freight expert is non-negotiable when manufacturing goods overseas. They know the rules of importing products in and out of different countries, especially those deemed dangerous goods, such as battery-operated products.
Get your paperwork in order: When products are in production, you’ll often have an estimated collection date. Keep the lines of communication open with your freight forwarder, as once you have this timeframe, they can pre-book shipping lines and get your paperwork sorted before the product is even ready to send.
Learn about your manufacturing location: Over the Chinese New Year, most Chinese factories and shipping ports close down for a fortnight. So I know that costs often inflate in the lead up to February in order to cope with heightened demand. Being aware of these details can help create a considered action plan and minimise the risk of unwanted surprises.
Speak to your stakeholders: Keep the lines of communication open with your manufacturers and suppliers so that you can forecast orders according to scheduled production runs. This means you’ll have an accurate idea of how much stock you’ll have on hand and when it will be ready to sell.
Source : Xero