Starting and running your own business can be extremely rewarding, but it also comes with plenty of challenges, especially regarding profitability.
A well-optimized supply chain allows businesses to keep their shelves stocked and their customers happy while also ensuring they’re paying the lowest prices possible. According to research, almost 80% of companies with high-performing supply chains have higher revenue growth than the industry average.
One thing you should always keep in mind, however, is that there are several ways to improve your supply chain and supplier relationships to help you increase your bottom line.
Here are four ways to do just that and make the most of your supplier relationship.
Analyze your supply chain strategy
$15.85 billion is the market size of global supply chains. From 2020 to 2027, the global supply chain market is expected to grow at a CAGR of 11.2%.
So, identify where opportunities exist in your supply chain strategy. What could you do differently that would maximize your revenue?
For example, could you alter how much you charge for products or services? Do any of your suppliers need replacing, or is it time to find new ones? If a supplier isn’t providing enough value, plan to seek out new ones to increase profitability.
The key is to keep costs low while maintaining high quality. Consider investing in Supplier Management Software to improve the efficiency of your overall supply chain and maximize revenue.
2) Inventory Management
If you don’t know what your company is doing regarding inventory, that’s a problem. Many supply chain managers are tasked with managing or aiding an organization’s inventory management, whether it be purchasing new stock or shipping items to customers.
In addition, these same supply chain professionals might even have a role in analyzing and maximizing revenue from suppliers – those companies that sell raw materials and products directly to their enterprise.
For example, if you’re trying to obtain large quantities of a specific type of plastic for manufacturing purposes, you may want to think about branching out directly to distributors. This could help you save on freight costs and get better deals on larger orders.
3) Customer Cash Control
Your customers want what they want when they want it. As an entrepreneur, you can use that demand as a powerful weapon by building your company’s supply chain—how you receive, store, ship, and deliver products—to benefit both your organization and your customers.
If cash is king for any enterprise, customer cash control allows you further to increase profitability with tighter control over inventory expenditures.
A business’ supply chain involves many moving parts, but it all starts with a strong relationship between your company and its suppliers. Your supplier can be another business or an individual; either way, when you’re buying products from them regularly, they become a crucial part of your supply chain.
4) Operating Expenses Control
You can improve your profit margin in several ways, but one of the easiest is to control operating expenses. Start by analyzing your operating expense reports; which costs are rising most?
When you have a few different areas that need controlling, find cost-cutting solutions such as switching vendors or reducing hours. The trick here is to research and ensure that solutions won’t adversely impact sales.
Bottom Line
The ultimate goal of any business is to make money. But what’s interesting is that even though all companies aim for profit, many neglect a fundamental way of achieving it: their supply chain.
If your business has a less-than-stellar supply chain, you can bet there are ways for it to perform better. The key is knowing what those issues are so that you can find solutions—and ultimately, make more money.
