If it’s a dream you’ve nurtured for years, it will be incredibly rewarding to start your own small or medium-sized enterprise (SME) in the Philippines from scratch. But many entrepreneurs will tell you that it will be an uphill battle in the beginning. One challenge you should be prepared to master as soon as possible is supply chain management.
Your ability to manage your supply chain will greatly affect your business’s bottom line. Depending on how well you do it, you either achieve major cost savings or reel from damage due to costly mistakes. Moreover, having effective supply chain management in place will be vital to your growth as a business. If you lose sales due to supply chain hiccups, this could lead to widespread customer dissatisfaction and distrust in your business’s capability to deliver. Conversely, excellent supply chain management practices will draw people to your business and attract demand from areas you haven’t set up shop in yet.
Here are six useful supply chain management tips that a first-time business owner can implement right away:
1) Build Strong Business Relationships with Supply Chain Partners
Much of your success at supply chain management depends on the strength of your supplier network. You’ll want to establish strong relationships with your business partners, including your suppliers and distributors. Establish trust within your network by maintaining open and transparent communication channels with your partners. Most importantly, honor your commitments, such as payment terms and order quantities, consistently.
For supplier payments, you should consider opening an online business banking account with an innovative digital bank that won’t require a minimum balance. One viable option for business owners based in the Philippines is the Maya Business Deposit account. Integrated into the Maya Business Manager dashboard, a Maya Business Deposit account expands what small business banking online can do. Using the features on this account, you can schedule payments regularly to your suppliers and disburse commissions to distributors or agents if you have them.
You’ll be able to earn the trust of your business partners if they can rely on you to pay them on time. You’re also more likely to receive preferential treatment and support from them during challenging times.
2) Diversify Your Network Suppliers
While any first-time business owner would be pleased to have a go-to supplier, relying on just one can pose significant risks to your business. If your sole supplier faces issues like production delays due to political instability, for example, your entire supply chain could experience devastating disruptions.
To mitigate this risk, consider diversifying your supplier base. It’s important to identify and onboard additional suppliers who can provide similar products or materials. Diversification not only safeguards your supply chain, but also gives you negotiating leverage for your stock.
3) Develop a Solid Risk Management Strategy
Do you remember what happened during the Suez Canal obstruction of 2021? For six days, a container ship blocked the traffic passing through this narrow stretch, causing delays for over 300 vessels. The incident had a major economic impact around the world and even spiked up prices in some countries. It also highlighted the need for businesses to build supply chain resilience. As a small business owner whose supply chain is vulnerable to such events, heed the lessons of the Suez Canal blockage and plan to be prepared for the worst of situations.
It’s crucial for any new business owner to develop a robust risk management strategy for addressing potential supply chain issues. The risk management plans should outline steps to take when particular disruptions occur, like natural disasters or geopolitical strife. This will ensure minimal impact on business operations and the business’s overall capability to address the needs of its customers.
4) Utilize a Custom Inventory Management System
Good inventory management is a pillar of effective supply chain management. An off-the-shelf inventory management solution may suffice for your business in its earliest stages. But if you have your sights set on expansion, consider investing in a custom system tailored to your specific needs.
A custom system can provide greater visibility into your inventory and automate tedious processes like counting stocks. This will help you assess your inventory situation in real time and make the most responsive and cost-efficient decisions for ordering and restocking. Work with IT professionals or software developers to design a custom solution that suits your budget and requirements.
5) Be More Data-Driven When It Comes to Your Inventory Management
The intuitive approach may have worked for the earliest stages of your business development. But now that your catalog is much bigger, it’s even more important for you to be precise and analytical about your inventory management. Instead of relying solely on your intuition, aim to be more data-driven about inventory management and to use the most advanced technologies currently available to you.
Being by collecting and analyzing historical sales data and supplier lead times, as well as any significant patterns in your customer demand. Use this insight to optimize your inventory levels and reduce your risk of overstocking or running out of essential items. Soon enough, you’ll find that making more data-driven decisions will lead to significant cost savings and improved customer satisfaction.
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6) Stay Up-to-Date with the Latest Supply Chain Management Technologies and Innovations
It’s never too soon for you to explore innovative solutions like artificial intelligence (AI) and the blockchain to enhance efficiency and transparency in your supply chain. For instance, AI can be used for sales forecasting, while the immutable digital ledger technology of the blockchain can provide your business with secure and transparent record-keeping practices for supplier payments.
Meanwhile, in terms of financial innovations, there’s nothing quite as practical as online business banking, Philippines or in any other country. With the digital nature of banks these days, small business banking can be done virtually anywhere as long as there’s reliable Wi-Fi.
Indeed, supply chain management is a critical aspect of running a successful SME or startup in a country like the Philippines. Through strong relationships with your suppliers and a precise, data-driven approach to managing your inventory, you’ll be able to build a supply chain that will help your business grow.
