10 Ways Small Businesses Mess Ship Up
Master transportation and logistics and make your small business a success.
One of the biggest misconceptions that small businesses make is thinking they should be able to instinctively know how to set up and manage their supply chain. Nothing could be further from the truth. All those feelings of insecurity, anxiety, and confusion regarding supply chain and logistics are completely valid. Education can help ease these feelings of uncertainty. With that, here are 9 ways that small businesses mess up their ship.
Not mapping their supply chain.
Mapping your supply chain can transform your business. It gives you insight into all the steps your product goes through, from raw materials to production to delivery to customers to end of life and everything in between. As a result of this visibility, a business can identify gaps and redundancies so that the supply chain is streamlined as much as possible. There are so many things in a supply chain that cannot be controlled, weather, pandemics, war, and other political issues. A supply chain map ensures that the business addresses and even prevent possible issues within its control, as well as having strategies to deal with situations beyond its control.
Not properly tracking inventory.
Inventory is a significant place where small businesses miss the mark. Not knowing what you have puts you in a position to guess or estimate, which can lead to poor decision-making on things like ordering, marketing, staffing, and pricing. When your inventory is not correct, you risk unhappy customers due to products not being available, or you waste money on expedited shipping or last-minute orders from your vendors. The consequences of not properly tracking inventory can be financially and logistically devastating for your business.
Using JIT (Just-In-Time).
Just-in-time inventory management may seem attractive at first glance, especially if your business lacks space and capital. But this system can be extremely complicated and risky. One delay or mishap and your whole supply chain can fall apart. In addition, this system is very inflexible because of its constant demand for low inventories with no room for error or fluctuation in the number of orders or production rates. While it may be tempting to use a system like JIT to save money in the short term, these negatives outweigh the positives. JIT has a place and it is not within a small business’s supply chain strategy because it can be too complicated for them to manage effectively with their limited resources.
Committing to only one supplier.
Committing all your purchases from one supplier may seem like a good idea; however, should that supplier have any issues, you have no product at all. If you need say 4 different raw materials to make your product, you should have at least two suppliers for each of those materials. Rotating orders from them to keep your supply flowing. Should one miss a delivery, at least you know when the other should show up. Putting you in a position to plan around a temporary issue rather than getting stuck with a long-term problem.
Not Investing in technology
I'm not surprised small businesses shy away from logistics technology. To be fair, most of it is garbage. Some apps and platforms only compile information from other websites (like tracking apps) or they don't do what they promise (truck loadboards). However, I think there are a few technologies that should be the bare minimum, like inventory tracking (not in Exel) and some kind of transportation management system.
Using the wrong technology
In the same way as number 5, people can swing all the way over to the other side and get all the technology that is being offered to them. The supply chain management of your small business does not require dozens of subscriptions and platforms. Actually, no business needs that much technology for a supply chain strategy. If you feel like you could manage your supply chain more easily without technology, it's probably because you have too many or the wrong ones.
Misleading customers
Likely business owners are not meaning to mislead their customers; however, it can end up happening by overpromising and under-delivering (pun intended). Trying to offer everything a large company does is usually the way that small businesses end up getting into trouble. Smaller businesses offering next-day delivery or free shipping will either have to have very high prices to compensate or will end up failing at providing a great experience for their customers. Honestly, most customers want consistency and quality over speed. Personally, I would rather be told that the shipping will be 7 days and it comes in 2 than vice versa.
Being cheap.
Not spending any time or money on a proper supply chain and logistics strategy will only cost you more time and money later on. I cannot tell you how many times I have been approached by a business that has built an entire business, product, brand, marketing, and sales, only to have no idea how they were going to import or deliver their product to their customers. This is something you need to invest in before you have any sales, or your whole business strategy will be missing an enormous and frankly the most important piece of the puzzle. Investing in your supply chain strategy can be as simple as spending a few hours with a consultant to map the supply chain and get a basic idea of your costs. This will set you up for a much better launch than winging it when the time comes.
Only using one mode of transportation
There are 5-8 modes (depending on who you ask) of transportation that you can choose from when building your supply chain. So why do so many businesses only use one? The flexibility multiple modes can provide you even when you are a smaller business is something to explore. For example, samples can be flown while orders can be shipped via ocean. Or sometimes a small shipment may actually be cheaper to fly instead of sending it on a truck. There are a lot of options out there, make sure to understand them and use them when it makes sense.
Not educating and informing themselves
This is a pet peeve of mine. I am not suggesting that small business owners become experts in supply chain and logistics but educating themselves on the basics will enable them to make confident informed decisions about their business. Knowing that there is a possibility of a port strike or that there will be a tariff increase in a country that you ship from can help you make plans to address these things before they happen and not react after it's happened to everyone else. Also, education can prevent large supply chain companies from overcharging or selling something that is not necessary.
When looking at this list, if it is overwhelming, start by mapping the supply chain of your small business. This will highlight where changes are needed first and areas that can maybe wait. If you consider working with a consultant, having them help map the supply chain is an excellent starter to ensure both parties know what should be addressed and in what order. Looking for a consultant? Let's chat, you can book a free 30-minute consultation with me here.
