Tips for Supply Chain Startups

By Barry Kukkuk

Starting a new business doesn’t come without some serious challenges. Having started my career as the co-founder and developer for a retail management solutions company in 1995 and later branching out into the corporate world, I have seen and experienced a great deal. It’s often the small and ‘basic’ tasks and activities that can make or break your business. I’ve put pen to paper and jotted down a few things that I believe should form the starting blocks for all start-ups in a supply chain business.

Have Direction

Fast forward the blueprints of your business in your mind and think about how you want your business to look in 10, 15, or 20 years from now. By having a clear picture of your desired direction and destination, your daily tasks and projects are easier to align. Be steadfast and proactive in your approach, and always have your end result in mind. Every time you make a decision, ask yourself this simple question: “Will doing this decision/activity get me to my ultimate goal?” If the answer is not “Yes,” don’t do it!

Selecting Partners

It’s very tempting when you start to take absolutely ANY interest from suppliers or investors as attractive. Don’t be desperate – shop around, engage with multiple suppliers as well as numerous investors, and don’t settle for the first thing that comes your way. The additional time and effort spent to review multiple proposals will optimize your commercial outcome in the end. Don’t get caught up in only analyzing your suppliers’ company. Make sure that you spend time sharing YOUR company’s vision and plans with potential suppliers. You want to foster a healthy relationship with your suppliers and investors, so they need to be as excited about your business as you are. Ultimately by engaging with the right people will ensure a speedier, efficient, and more cost-effective entrance into the market.

In the beginning, avoid getting into long term contracts with suppliers until you have established your products and volumes and are sure about your path moving forward. Instead, enter into project-based agreements. These short-term contracts are an excellent way to build trust for both parties and lay a solid foundation for ongoing business relationships.

Insist on full transparency with your chosen suppliers. Of course, you don’t have control over their business, but it’s essential to know when and if they are having problems as this may have a spillover effect on your business, and you need to be prepared to adjust if necessary.

Invest in IT

Remember that data is the fuel that powers the 4th Industrial revolution, and you are only as good as your data. As a start-up, you can launch your business by taking advantage of all the new hi-tech solutions that are now available and spearhead the digital adoption in the industry. You are at an advantage as many of the existing players are stuck with old tech and disparate systems that usually require huge capital to update.

IoT technology can provide relevant and real-time data, Blockchain, and Cloud Computing that can streamline all your processes across the supply chain with transparency and visibility. So, invest in sound technology and cloud solutions – you won’t be sorry.

You will probably be better off not using the absolute bleeding edge technology when starting. You don’t want to be a Beta tester for some new technology. You cannot afford to invest your time and capital into someone else’s technology. Instead, go with something modern, but battle-tested. You will have up-to-date technology, and that technology will be stable and give you a return on your investment.

Remember that you won’t have any point of reference or historical data to fall back on and will need to use your intuition and market research data to order your first batch of items. As you grow, it’s imperative that you invest in a sound Inventory management system that uses algorithms to predict inventory needs and enables smart demand forecasting. You don’t want to end up a warehouse full of products that you can’t sell. So, for new businesses, start small and scale up as your demand increases. Instead, stock the things you know will move and take your chances on riskier items later when your business is in a better financial position to do so.

If local and global shipping is part of your operation, invest in a sound transportation management system. This will help you to improve your warehouse efficiency and your customer service. Look at warehousing systems, connected IoT devices and sensors (depending on your operation) and any other technology that will simplify your processes and give you full visibility, reporting & analytics. You want to have a complete 360′ digital operation – and this does not have to cost you an arm and a leg, the SaaS solutions out there are very affordable.

It’s all about the people and your relationships (staff, stakeholders, suppliers, and customers)
Let’s face it – products and services are all very similar in features, functionality, and cost. Sure, you may get some with slightly more features and slightly less in price, but in the end, it’s all much of a muchness. What sets companies apart are their people.

So, when you are recruiting your teams, take this into account. If you are looking for sales, admin, or marketing staff – hire for personality and train for skills. If, however, you are looking for an operational or IT person you should hire for skills or hire the right type of personality style for this function, someone with an analytical & logical mind. From your receptionist as the face of your company to your admin, store workers, drivers etc. you want to select people that are positive, energetic, results-driven, and passionate about their careers.

Create a working environment that will attract talent. Of course, employees want a cheque at the end of each month, and they want benefits, sick and annual leave, etc. But today’s millennials want more from their working environment and employees than previous generations did. They want to be working for companies that care about our world and the people in it just as much, if not more, than they care about the bottom line. The new-age employee is not so much focused on climbing the corporate ladder; they are happy with lateral growth. They are content as long as they are continually learning and growing; they don’t necessarily feel the need to be promoted to new positions. They want a seat in the business where they can make a difference. They want a positive work environment where team collaboration is of utmost importance, and they want to be involved with building, maintaining, and contributing to company culture.

Millennials are always connected to their work and require employees to be flexible with traditional hours of work. They may be up at midnight, hammering away on a project or working all weekend. If they are productive and delivering excellent quality of work does it matter if they are working off some beach in the Bahamas or still in their PJ’s at 10h00? They want the freedom to be innovative and to test new ideas, and they want to work for companies that embrace this.

It’s About Value

Analyze your service/product offering and decide what makes you unique and what sets you apart from your competitors. It could simply be offering a superior customer experience and service. Service levels in many countries are much to be desired, and providing a good one could be all that is needed to set you apart. Remember, though – you need to show proof of value – not just pay it lip service.
Is the customer always right?

Yes, the customer is King, and he pays our salaries, but he is not always right, and in some instances, you may be better off without him. I hear you shudder at this statement. Of course, you must try to make every interaction with every customer a priority and unique customer experience. Still, there are some clients out there that are impossible to deal with and end up making you and your employees’ lives a living hell. Look at the numbers and see if this customer is worth the angst. Sometimes, firing a customer is the best thing you can do for your business.

The supply chain landscape is highly competitive, and without a solid plan in place, you will most likely not see through your first year. As long as you focus on your end game and are prepared to put in the time to go the distance, you will have every chance of success.

Barry Kukkuk is the CTO at NETSTOCK, where he is responsible for all customer-facing technologies and systems that keep thousands of customer instances working correctly.