A logistics disaster can break a business, it’s as simple as that. If you’re running a small business for the first time, you’re bound to make some mistakes. But ideally, you want to minimize these mistakes as much as possible, especially when it comes to your supply line and the logistics of your business.
As a general rule, the larger the business, the more complicated the logistics side becomes. So, how can you get a handle on things early to make sure you can grow your business and keep the logistics under control?
A Robust Infrastructure
Company growth is a good thing, right? Well, most of the time.
There are some circumstances where company growth can be dangerous, especially when your company grows rapidly. Sometimes a business experiences an unexpected leap in demand and popularity and, while this can be exciting if you can capitalize on it, it’s also a scary time.
If your company grows too quickly, it can become bloated. You might make short-term decisions to handle a larger workload, without building a robust foundation underneath. Or you might grow your business to meet a demand that doesn’t last, leading to massive costs and limited profits.
Ideally, you should be constantly updating your company infrastructure to ensure that it can grow steadily and support more demand and a higher rate of production.
Take advantage of these opportunities without betting your business that they will last. Instead, use them to bankroll a more stable business infrastructure so it can grow healthily with more assured profits.
Vendors and Logistics
Delivering a product to a customer is a complicated process with a lot of steps. First, you manufacture a product. This can take multiple steps. Then, you need to store the product until it’s time to ship it to the customer.
There are so many places that the process can go wrong, even before the manufacturing process begins. The real first step is to source and transport the materials you need.
This means you need a great vendor and, ideally, good supplier relationships. Better relationships can mean better deals and first dibs on certain materials that your company needs to improve.
Ideally, you need to cut down on transportation costs and time as much as possible. The further a material or product travels, the more it costs and the more risk there is that something can go wrong. So, look for local suppliers and don’t be afraid to pay slightly more for a more convenient product.
Inventory Management and Storage
One temptation might be to stock up on products so you have a ready supply for customers. While this can mean your company can deal with sudden boosts in demand, it tends to cost more than it provides.
The longer your product is stored for, the more it costs to store it, especially if you’re holding onto a lot of product which requires a lot of storage space. Remember, space costs money, especially if it’s near a busy store. Instead, try to keep your inventory management lean and active.
An inventory management POS system can tell you exactly what you need and when, as well as what products are more in demand for customers. The more information you have, the more power you have to tweak production chains and meet specific demands.
This is ideal for smaller businesses, as the system lets you know when you’re low on stock and what products aren’t doing as well. This keeps your inventory storage lean, while cutting costs elsewhere and allowing your company to quickly adjust when needed.
Wait Times and Increased Demand
So, how can you handle increased demand?
First, look for patterns. If demand increases suddenly, it could drop just as quickly. This is why it’s not a good idea to hyperfocus on a product and switch everything to higher production, because you could be left with too much inventory that you can’t shift.
Instead, make sure you have a small surplus so you can track sudden leaps in demand as they happen. You can then track how long the increase is going on for. If it’s a more permanent boost, which is normally more gradual than a trend catching on, it is worth investing in higher production.
By staying flexible, you can navigate these situations and capitalize on them without stretching your business to the breaking point. Or, if the trend dies down, your company can simply carry on and grow steadily in other ways.
