Setting up Supply Chain for your Startup: Full Guide
A complete guide to understanding and setting up a supply chain.
So, you are ready to take your product to the market hah? All this while, you have been focusing fully on product development ( and maybe a bit of marketing), but now it’s time to jump into another segment, that is the supply chain.
Many founders often don’t give much thought to supply chain management, but it is something you really need to look into. Because how you deliver, when you deliver, how your customers interact with your delivery system all become a defining experience through which they judge your company.
Efficient logistics is an essential part of your brand experience. Having clarity about supply chain cost is also essential in planning finances. A well-optimized supply chain reduces the end cost of your products.
In this guide, I take you through the steps in effectively setting up your supply chain.
Predict how much initial sales you would have for each of your products. Don’t over or underestimate this number. Overproduction might lead to large losses (especially in the case of perishable goods) and underproduction would leave your first customers hanging. Take into account the time it takes for the supplier to deliver new inventory.
Starting out you can use a simple spreadsheet for managing demand forecast, after which you can move to software. It’s also wise to keep your product assortment minimal and branch out as the demand increases.
Inventory management is tricky. You have to find that fine balance between under-stocking and overstocking. Look at the current flow of sales for each of your products and the lead time of delivery from the supplier to plan out your inventory. It would be great if you can have end-to-end visibility on your product using bar codes and API integration. This way, you can plan out for any mishaps like delays in shipping, a roadblock, product getting stuck in a warehouse, and so on.
You can use an excel spreadsheet or make an investment in simple SAAS-based ERP systems built for SMEs. Many ERPs also provide customization of features according to requirements. These softwares are easier to use than an excel sheet and give you many useful notifications, like when your stock numbers are low. They can also be connected to your website through APIs, ensuring that your e-commerce website shows the right stock. You can move to large ERPs as you grow.
It’s senseless to spend large chunks of capital in setting up your own warehouse. Thus it is almost always the right decision to outsource your warehousing to 3PL (third-party logistics) companies.
Companies like Navata Supply Chain Solutions, provide flexi 3PL services. This means that you pay only for storage space used, helping you scale easily to increasing demands. Almost all growing startups right now are opting for flexi 3PL services. Moreover, 3PL companies have their networks established across the country, enabling quick penetration to new markets, both cities and upcountry.
If you are outsourcing your warehousing operations, the logical next step is to outsource your last-mile delivery as well. 3PL companies handle large volumes of packages and thus your company can benefit from the the economies of scale in the last mile operations.
Companies like Navata SCS, optimize their delivery with artificial intelligence based route planning, which in turn reduces the time and cost of your last-mile logistics.
The E2E customer Experience
Defining the sales channels and the e2e experience of the customer per channel is very important. Especially for B2C companies, having online presence today has become a no brainer post covid. Customers are super used to online ordering right now and they have their standards. Same-day or next-day delivery is now an expectation.
If that is not affordable, what you can do is set the right expectations with your customers. Calculate the lead times correctly. Lead time would include the time taken for your team to process the order plus the time for the warehouse to receive the order, retrieve the inventory and deliver the product to the end customer. Add the time taken for the inventory to be shipped from the supplier, if your product goes out of stock.
Make sure that your customer can track their products right from order, packaging, shipping to delivery. Proactively communicate and apologize for any delays in the supply chain. Provide awesome customer care.
Unless you have past experience in logistics, you may be better off outsourcing your logistics. This leaves you time and energy to focus on product development, marketing, and customer service.
CEO, Navata Supply Chain Solutions.