The 4 Pillars of Procurement For Small Businesses

supply chain solutions

No matter if a business is small or large, the part of procurement have always played an essential role. It is due to the fact that the supply chain solutions helps out the businesses in achieving greater success in its ongoing operations, minimizes the cost, and help one in gaining operational success. Mainly it happens with the beginners in the industry as well as small businesses as these are the two cases when the performance of the supply chain leaves an adequate impact on the overall performance of the business. It is not a necessity for the one to become a top 10 company in the fortune 500 companies in order to ensure strengthening practices of the supply chain management.

“Having established a perfect supply chain management is also referred to as a key contribution towards growth in the business”

4 pillars of procurement for the small businesses

Looking forward to grow the size of your small business? Below are the 4 main strengthening pillars of procurement for your business with an increasing benefit of mitigating the risk of failure if you’ve just started with your own business.

1. Depending on your market position, create the strategies for development

Since the industries have turned way too competent, the small companies must create both the short and long-term strategies in accordance with their position in the market. When a company is recognized as a low-cost product and service provider, it is a better option to search for the strategy that carries a supplier criteria where lowest cost plays an essential role. One of the other better options is also to keep in consideration those offshore suppliers who pays greater attention towards the cost management. If you as a company plans to enter the market with a new product, consideration must be placed towards the suppliers who pays greater attention on quick prototyping as well as quick deliveries. The next consideration part would be the cost.

2. Look for the supplier whom you can rely upon and encourage those relations

Where a business plans to form an effective supply chain strategy, it lies on the strength of the supplier. Recognizing the sources of supply can assist an organization in satisfying the operational obligations with the growth of the company.

Despite the size of an organization, having the great relationship with the supplier can be done via the creation of clear pathways so that none of the opportunity to work with the supplier can be missed.

3. The management of suppliers via the development of metrics (both qualitative and quantitative)

For an effective supply chain management system, it is also essential to track the performance of the supplier with a vendor performance management system by GatekeeperHQ. This may include the key performance indicators including, time of delivery they take and the quality of their service. Make a comparison of the delivery date the suppliers have committed with the actual date of delivery. Additionally, communication must never be stopped if one is to bring improvement in the overall performance and thereby willing to minimize the cost.

4. Risk management within the extended supply chain

The companies that are either a new start up or those that are small in size are prone to be at risk due to the perceived lack of leverage and of course the future financial impact. Develop a strategy for the analytical items and future workarounds for the disruption in the supply chain. Make sure that you maintain the continuity within the supply via recognizing all the critical path suppliers within the expanded supply chain. Question your supplier regarding how they are dealing with the risk. Below are the two common risks that needs to be managed;

  • Risk relating credit lines

The risk relating the credit lines is high. Ensure the establishment of the sufficient credit lines especially when the growth in business takes place. Also make sure that all the bill payment is clear. The other risk attached includes the risk of “cash on delivery” and the “credit hold”.

  • Risk relating the confidentiality

Make sure that you get a non-disclosure agreement signed by all the suppliers to make sure the protection against the IP and the issue of confidentiality.

Running a small business? How do you manage your supply chain? Feel free to share with us in the comment section as below!

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