Three Easy-to-Miss Errors Lurking in Your Supply Chain
By Jasmine Glasheen
Whether you are refining, designing, packaging, manufacturing, or delivering, your business relies on a supply chain that you want to be able to trust. Your company can be thrown for a loop when the unexpected happens, and you may need to reassess your steps to increase accuracy. Even the smallest adjustments can significantly enhance your odds of a steady workflow. Here are three easy-to-miss errors that might be lurking in your supply chain right now.
Not Creating Effective Vendor Relationships
Although price is an important factor, it cannot be the main decision when choosing a supplier. Customer service, quality of work, and employee relations also need to factor into your business decision. Developing a strong, lasting, and secure connection will be more beneficial for your team in the long-term than trying to cut corners in order to save a couple of dollars. Cheap prices can often lead to cheap products, or simply a lack of quality control. If you’re looking for where to start finding the right vendors, be sure to check out industry events, (for face to face interactions) trade publications, industry organizations, and even online directories. Sourcing quality product through long-term vendor relationships is key to any brand’s lasting success.
A major fashion retailer recently suffered flagging product quality, going down-market in a big way to keep making sales during the race-to-the-bottom. It wasn’t until 2018 that they began to repair their image with higher quality products. Years of over-expansion and mass production with low-quality materials took its toll on the brand’s image, and the retailer’s brand name no longer carries the weight it once did. Your products’ final destination is important, as well, and selling products in off-price and discount outlets can lower your brand’s value proposition. When a retailer is hanging on by a thread, they aren’t a good allegiance for a mid-to-luxury brand struggling to retain their value proposition. Off-price retailer’s shelves are often mismatched or overstocked, and they don’t have the ‘Wow factor’ necessary to capture luxury market share.
Choosing a Supply Chain with a Creative Limit
If your supply chain is limited to one type of business, it makes it difficult to pivot to meet industry trends and demands. Operating in a single vertical also makes it more challenging to change, update, or add products to your inventory. For example, you may have a supplier that can provide printed mugs, but if your company wants to expand from mugs into screen-printed water bottles and coasters you need a vendor that can provide this service on a broader range of inventory, and that can also offer the same quality of product and cost of production. To ensure your business is ready for what comes next, check to see what a potential supplier can provide in terms of complementary inventory as your business scales. Vend suggests focusing on the Total Cost of Ownership (TCO) instead of just the initial price of an item so that you can build supplier relationships with long-term value instead of basing decisions on short-term cost.
One company that can be used as a prime example of creative limit is Blockbuster. The video rental company was at its financial peak in 2004. Even after consumers switched from between VHS to DVD, Blockbuster persevered by providing both options in-store. Then Netflix showed up and disrupted the game. Netflix began sending DVDs directly to customer’s homes and even created an online video streaming service. Suddenly consumers could stream video from their laptop or television and share what they were watching with others. Then Netflix went even further by creating their own content streaming big hits like “Stranger Things” and “Okja.” Netflix created their own products rather than staying stagnant with work from other creators, and soon Blockbuster fell by the wayside. The ultimate error for Blockbuster relying on what already had been done in their industry––i.e. hard-copy content from other sources––and refusing to expand upon physical delivery, this bypassing their potential long-term growth.
Not Being Prepared to Lose a Supplier
It is important to have a plan in place in case of unexpected failures or risks (like a supplier that you depend on going under.) You do not want to have to wait until the worst happens, so having back-up vendors in your pocket will keep you on top of production. You will want to know what their turn-around time is for production, and trust that what they produce is going to be similar in quality to your last supplier. Considering that delivery and fulfillment costs have the biggest impact on a retailer’s online order fulfillment strategy (they account for over 46% of overall logistics spending), you are going to want to weigh cost versus speed in order to select the right vendor.
Supply chain relevance is a timely topic, as the Trump administration is continues to place bans and US tariffs on foreign imports. Even something as simple as paraffin wax is being targeted. Candle companies that use paraffin wax are suddenly facing unanticipated budget constraints and are being forced to evaluate new production materials. Unanticipated tariffs mean business owners need the ability to immediately re-budget and look for less expensive suppliers, which may mean choosing a vendor from a country that isn’t being targeted by tariffs. The ability to pivot and readjust has never been more important, since you may need to increase manufacturing costs altogether, let employees go, switch production materials, or scramble to find a new supplier altogether just to stay in the game.
Regular Chain Maintenance
Identifying and addressing weak links in your supply chain can protect your business during this volatile era. Continue to protect your brand’s integrity, plan for long-term growth, and always be prepared for a loss ahead of time to keep your business expanding in the right direction. Supply chains have never been more volatile, so be sure to continue connecting with others in your field through online discussion forums, organizations, and conventions to stay one step ahead of any impending changes. Through consistent maintenance, research, and a willingness to adapt quickly, you can ensure that your business comes out ahead of any changes (or tariffs) that are enacted in the coming year.