Supply chains are what make any product possible and while it may sound like a big word only used for large businesses, it is something every business relies on, even the smallest ones. We’ve mentioned supply chains before in our Kickstarter Manufacturing post, but I wanted to discuss it just a bit more because it’s so important.
Understanding and maintaining your supply chain, even if it’s just one or two people or companies is important. Just to get a single pen for you to use at your company involves a pretty long supply chain, from gathering the raw materials, to manufacturing, to distributing, to you receiving the product. Your product has a supply chain as well, it might involve just a couple suppliers, one distributor, and the end customers, but a breakdown in that chain can mean company failure, bad press, or profit loss that affects you for years.
When sourcing for companies, we look at as much of the supply chain as we can see. Many companies keep their exact supply chain hidden in order to keep ahead of competition or many other reasons. The longer the chain the more potential issues can arise. Always look for the shortest chain possible, go direct to manufacturers instead of buying from end distributors for sourcing your products components. Longer supply chains also make for more expensive parts.
When possible, always create backups for your suppliers in case something goes wrong. While you can’t always have this, especially if you require suppliers to be only from a single country or area, you should always try to set it up this way. Manufacturers close down, change services, make certain products obsolete, stop producing a product, etc. You don’t always get advanced warning for this either, which can cause many different issues for you.
Supply chain management and set-up is an investment. Even if you are a start-up and think that the investment is too high, the downside is a much steeper cost and can cause permanent damage to your company. An investment like this will seem small in the future when you’ve weathered suppliers closing, product failures, and many other issues and are still providing the best product possible to your customers. A good supply chain leads to happy customers.