Four Supply Chain Solutions for Your Small Business


One of the most important concepts of inventory management is learning how to optimize your supply chain. The term “supply chain” might sound overly complex for a small business. A supply chain is not really a “chain”. It’s more complex and multi-directional than that. But the truth is that every retail business, no matter how small, has a supply chain too. The supply chain involves all of the various steps and processes involved with bringing a product or service from a supplier to a customer. Check out these supply chain solutions to help minimize your small business’s expenses, maximize your cash flow, and boost your profits.

Diversify your supplier base

Do you sometimes feel like you rely too much on just a few key wholesalers and vendors to provide your small business with inventory? What would happen to your business if one of your wholesalers couldn’t deliver a shipment on time? Or if you had a disruption of their business operations or went out of business altogether?

Here are our top supply chain solutions when it comes to finding suppliers:

  • Don’t rely too much on few suppliers.
  • Do keep your supply chain nimble by having backup suppliers.
  • Don’t jump at the first vendor you find.
  • Do make sure you’re familiar with all major wholesalers or vendors.
  • Don’t buy products at random.
  • Do test the market to see what products work.

It’s good to be loyal to suppliers that have earned your loyalty, but keep in mind that as a retailer, you’re the customer for multiple different businesses. Vendors need to keep competing to win your business.

You don’t have to be cold and heartless about it, but it’s good to keep your suppliers on their toes – don’t let them get complacent; keep your options open and always do what is best for your customers and for your business.

Use supply chain management (SCM) software

Supply Chain Management (SCM) software might sound complicated, expensive and better suited for big companies. However, more small businesses are starting to use SCM software. There are a lot of cloud-based SCM software options that enable small business owners to get just the right level of SCM support and features that work for them.

SCM software can offer supply chain solutions by helping your business track shipments, handle logistics, get data-driven insights into supplier relationships. Plus, its a great way to keep up a consistent overview of the state of your business’ inventory. It can also help you track how much inventory you need, how much is in stock, which items are selling quickly, or which product might need to be re-priced for a quick sale.

Consider drop shipping

Drop shipping is the process of selling products that are not currently in your inventory, and then paying a wholesaler/vendor to fulfill the order and ship the product directly to the customer. Drop shipping can help you reduce inventory costs, offer more competitive prices, and expand the range of products you sell.

Some products can also be drop shipped directly from the manufacturer – it all depends on the product’s maker’s business and what they’re willing to do; not every company will do drop shipping, but it’s worth asking.

Drop shipping is one of our top supply chain solutions for a few different reasons:

  • Save money on inventory storage.

With drop shipping, you can sell products to your customers, even if those products are not on-site. This greatly expands the types of products and sometimes the size and complexity of products that you can sell. You don’t have to worry about storing, packaging and shipping the products because that step is handled by your drop shipping vendor.

  • Maximize cash flow.

Drop shipping is great for cash flow because it works in reverse of the typical retailer-wholesaler transaction. Instead of buying inventory in advance (which sometimes requires an inventory loan), the retailer collects payment in advance from the customer and then pays the drop shipping vendor for the product. The drop shipper makes money by charging a small drop shipping fee to the retailer.

  • Save time on logistics.

Instead of dealing with packaging and shipping the product to the customer, drop shipping lets the retailer handle the front-end of the transaction (marketing and sales) while leaving the back-end of the transaction (packaging and shipping) to be handled by the drop shipping vendor. This saves time and lets you focus on what you do best as a business owner – building relationships with customers and making sales.

There are a few possible drawbacks to drop shipping, however. Sometimes the drop-shipping vendor might not have the same standards that you do for packaging, customer service or returns. So, make sure to discuss expectations upfront with your drop shipper. That way, you can deliver a consistent and positive customer experience, regardless of where the product is shipped.

Ideally, drop shipping should be a seamless experience for your customer. Customers shouldn’t notice or care whether the product gets shipped from your business or from your drop shipping supplier.

Look abroad for international suppliers.

It’s easier than ever before to be an international business owner with an extensive supply chain of vendors and wholesalers around the globe. No matter what you sell in your small retail business, there are amazing companies all over the world that would love to have you sell their products to your customers.

If you want to be 100 percent American Made with your inventory, that’s great too – lots of American consumers are looking to buy local and support locally produced items! But if you want to diversify your supplier base and offer exciting products from around the world, it’s more possible than ever before to do that.

As a retail business owner, understanding all of your potential supply chain solutions doesn’t have to be complicated – but it pays to spend some time doing your research and learning more about how your supply chain works as part of your overall inventory management process.

Whether you use supply chain management software or just want to take a more strategic look at where your inventory comes from, there are many options to get more out of your supply chain. Start with these supply chain solutions to begin boosting your efficiency, lowering your costs, and maximizing your profits.

The SmallBizRising Blog is designed to be an educational content hub pulling information, best practices and practical advice for the small business owner and features topics including accountingmarketingtechnology and more.  Be sure to subscribe to stay up to date with new content as it is posted.  The blog was created by The Neat Company and receives contributed content from a group of contributing companies that provide technology, services and solutions to small businesses.

This article presented by:
Kabbage, Inc.
The Kabbage team aims to help small businesses access the funding for growth. Kabbage empowers small businesses through straightforward, flexible access to capital.
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