Last week, The Telegraph highlighted examples of supply chain strategies for small businesses that are ready to grow. “Suppliers can make or break a smaller business, especially when it’s scaling up,” Lucy Douglas writes. “Securing sufficient product or service to support expansion is a minimum requirement for growth.”
The three entrepreneurs featured in the article offer the following supply chain advice:
- Focus on sales forecasts.
- Have a backup plan.
- Invest in your suppliers.
Tim Westwell is the co-founder and chief executive of Pukka Herbs, an organic tea producer. He stresses that it is important to look two to three years ahead in terms of sales forecasting and planning. This strategy has enabled the company to grow in its 16 years to produce 1.5 million teabags every day. Pukka Herbs sources its ingredients, including more than 150 herbs, from about 30 countries around the world.
Westwell also explains how weather can create a risk to his supply chain. One year, in India, the weather changes at harvest time rendered Pukka Herbs’ field mint unsalvageable. Westwell could rely on backup inventory and an alternate supplier, which reduced the delay in manufacturing the company’s Three Mint tea to only a few weeks rather than an entire year.
Frontierpay, which was founded in 2009, is an international money exchange broker. As the company has grown, its main business interest has also created its biggest obstacles. The company must keep up with the different and often changing financial regulations in the countries to which it delivers payments. To ensure that it appropriately follows these regulations and manages this risk, Frontierpay works with banks and other payment providers in 109 countries around the world.
Nat Davison, a Frontierpay partner, says the company was able to grow because it has multiple partner options in each country. “We always look to multiple partners and solutions per country to make sure that if one thing falls over in our supply chain, we’ve got a plan B, C and D.”
Similarly, Portview, which creates interiors for shopping, dining, working, living and entertainment spaces, sources its materials and products from all over the world. However, because of the deadline-driven nature of its work, Portview strives to work only with trusted suppliers.
“We’ve been in a few situations where, for example, a client has recommended [a supplier], then they go bust or don’t deliver,” said Simon Campbell, Portview managing director, in the article.
After some challenges in the beginning, Portview now also utilizes a systems approach to supplier management, which alerts company executives when supply might become problematic.
Lastly, when it comes to investing in suppliers, Pukka Herbs ensures that partners in its supply chain have the tools and know-how they need to meet specifications. The company spends time educating producers about organic farming. This enables the tea company to meet many requirements related to its organic certification. Efforts include simple books written in native languages that explain to farmers how to plant, maintain and harvest organic herbs.
As businesses grow, the ability to meet demand is a critical component of success. Consider the first definition of scalability from the APICS Dictionary, 15th Edition: “How effectively a company can grow its business in order to meet demand.” A key component of scalability is lean production practices, which help ensure that a company manages its resources and reduces waste in terms of material, time and overall costs. Lean practices boost efficiency and enable growing companies to accommodate growing production needs.
Now think about the definition of sales and operations planning (S&OP): “A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans.”
Small or large, companies must be scalable and able to forecast demand in a strategic and holistic manner in order to prepare themselves for future success. APICS recognizes the importance of S&OP as an essential tool and is proud to co-present the annual Best of the Best S&OP conference with the Institute of Business Forecasting & Planning June 15-16 in Chicago. Educational sessions promise to help you implement or improve S&OP at all levels within your organization. Register today at apics.org/best.