Whose Today’s Guest?
Kalaluka Kangulu is a Supply Chain Management professional with over 10 years of Management Experience in Procurement and Logistics, International Trade and Customs Compliance, Materials Management and Warehousing.
Supply Chain in a Small Business
The supply chain in a small business takes on the model of a corporate where you take care of your suppliers as part of the supply chain. Mainly when we talk of the supply chain we are simply referring to the flow of four (4) resources in business and these are:
- The flow of information
- The flow of finances
- The flow of commerce
- The flow of goods and services
It is these four resources that need to be managed carefully in order for a business to be sustainable and grow.
Improving the Relationship with Suppliers
In order to improve your relationship with your suppliers, one needs to start thinking in line with corporate maturity. This entails managing all the flows that were mentioned earlier.
Many SMEs relationships with suppliers are poor because the fail to manage the flow of finances in their business hence in most cases they don’t have enough money to pay for goods in good time. Another challenge that dents the relationship between suppliers and SMEs is the lack of effective communication between the two.
The flow of communication between the supplier and SME is important as it allows for the supplier to be aware of the challenges that you might be facing as a small business. So in a nut shell, Improving the relationship between you and your suppliers will require you to ensure that these 4 flows are well coordinated in order for business to transition smoothly.
Practical measures of ensuring that the flows are coordinated well involves a business owner learning how to manage finances, this is because many suppliers don’t want to deal on credit. They say 20% of a supplier’s clients will give them 80% of profit and for an SME on the customer base of a supplier my not qualify for that 20%.
What this means is should there be a shortage of particular good from your supplier, your business will not be taken as a priority due to your habit of getting goods on credit.
One way of avoiding such an event is to pay in advance for your goods or as a business you could learn how to communicate well in advance the challenges you are facing and integrate the suppliers into your business so that you build trust which is required for your relationship.
Pro and Con of Dealing with One Supplier
You are able to quickly build trust as the supplier as they can see that you are often dealing with them and nobody else. This will help suppliers build confidence in you.
Having one supplier can be devastating in the event that your supplier is shutdown. Finding alternatives that you can build trust in a short time is a challenge and something that might end up being costly for your business.
Though it is good to build relationships it is important to have risk management plans in place so that you can fall back on something in such an event.
Putting Clients on a Waiting List
Don’t make it a practice or habit to put your customers on a waiting list because customers are never patient. In most cases most a supplier’s clients are employees whose delivery is managed by someone else. It is possible on an individual level these clients may understand your predicament. But when it comes to the supplier assessment your company may fail and you may not be able to redeem your reputation as a top notch supplier.
In the event that you cannot deliver goods on time, communication is vital, as a business owner visit the supplier in person, build a relationship with them, something that you cannot do via phone or email. You need to make the effort. Yes, we are in the Covid-19 era but that’s no reason to stop building relationships with your suppliers and growing.
- SMEs need to operate like corporate’s in order to keep a good supply chain.
- Don’t make it a practice or habit to put your clients on a waiting list.
- Many SMEs fail to build relationships with suppliers because the fail to manage the four flows involved in a supply chain.
“Customers are never patient”