Many startups in the modern world tend to fail because they don’t plan costs around supply chain, logistics, and getting the product to the market. Without understanding your expenses and making the plan based on that, you won’t be able to do business correctly. In this article, we will show you seven steps on how to set up the supply chain for your startup.
Determine your inventory assortment
This is a starting step for your supply chain. Determine your inventory assortment based on the analysis and research of your customer base or any other relevant data. However, for young companies and early-stage startups, it is usually best to start a simple assortment of SKUs. Once you grow as a brand or a company, you can add more. It is tough to manage a wide range of product assortments in the early days of your business.
Determine the demand for each product
Analysis and research of the market and other essential data are crucial for this step, too. You have to predict the demand and sales of each product somehow. You can’t even think of running into the business without this analysis since you can’t risk to wind up over or under buying inventory. It should not be that hard in the early days of your business. However, when you grow, you will have to make a more in-depth analysis. Mistakes could cost your business massively.
You mustn’t be out of stock!
Getting out of stock can cause massive damage to your brand, especially if you are a young startup. Once customers get disappointed like that, they will never return. Therefore, being out of stock is a forbidden situation! Translate your data (from the previous step) into buying the inventory and replenishment plan as well. You have to make sure that you have enough inventory to fulfill the expected demand. To be able to avoid stockouts continually, you will have to track your orders and inventory every single month.
Track your inventory
Tracking your inventory is essential for various reasons – delivery times, transparency, proof of deliveries, etc. This step is especially crucial in situations where a delay is inevitable. With proper visibility, you will be able to make necessary adjustments and talk to your customers. You have to inform them about the delay and offer a solution. Software solutions and transport management systems, such as CartonCloud, are ideal for small or mid-sized businesses. You will be able to do more with your time, and also, grow your business potential.
Track your orders
Once you place orders and make an agreement with your suppliers, it is vital to track those purchase orders. The most significant reasons are delays and damaged products. In both situations, you have to react quickly because you might get out of stock. Of course, you can use Google Sheets or other simple tools. But again, it is far better to use software solutions to have a clearer picture of the current situation with your orders.
Think about outsourcing
Managing your own warehouse is a tough job. You might not have enough space, time, or resources. That is the main reason why some companies decide to outsource inventory management to third-party logistics providers (3PL). On top of that, you can outsource both the tracking and fulfillment part of management. Even though it might seem expensive, it will be beneficial for your business. You will save a lot of time, and you will leave this job to professionals.
Shipping and logistics
A supply chain is a very tough process, and logistics are one of its most essential elements. Logistics involves a lot of paperwork and scheduling, especially when it comes to international shipments. Therefore, it is a part of the supply chain where even a single mistake can cause a lot of damage. Hence, the 3PL system can be extremely useful in this area of the supply chain as well as using the software. You will always be able to track where the shipment is and that is the only way to keep a good relationship with your customers.