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How do I Choose the Best Supply Chain Strategies?

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  • Written By: Keith Koons
  • Edited By: Lauren Fritsky
  • Last Modified Date: 28 November 2016
  • Copyright Protected:
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    Conjecture Corporation
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There are many supply chain strategies for business owners to consider when searching for a new or improved way to make their products available to clients. The most popular option for small businesses is bringing products directly from the manufacturer or a designated retailer to their showroom floor, but in many industries, an extra layer of flexibility is necessary. Medium- and large-sized businesses implement supply chain strategies that entail a centralized warehouse to stock shipments before they are distributed to their various locations. Other business owners will avoid supply chain strategies altogether by having their supplier drop ship products directly to the consumer.

Although each method has its fair share of pros and cons, the most important decision that business owners face when considering supply chain strategies is having products readily available. If a manufacturer can successfully meet that need, then there is little reason to seek additional options unless cost becomes a factor. There is so much competition from wholesalers that smart business owners normally have two or three vendors competing for their business, and this is an excellent strategy for keeping each of them honest.

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Drop shipping has also become one of the more popular supply chain strategies for businesses that do not need to carry inventory within their storefronts. Instead of leasing additional warehouse space that needs to deal with factors such as climate control, utility bills, and maintenance, corporations will simply use catalogs or demo products for display purposes. Every time a sale occurs, the product is shipped to consumers by a separate company, so monthly overhead is kept at minimal levels. Businesses with a strong Internet presence also implement this method quite often.

Many companies are simply too large for the previous techniques to handle the flow of their businesses. In these situations, there is normally a centralized warehouse that purchases items in bulk and then redistributes them to regional warehouses by truck or train. At that point, the items are separated and shipped once again to the actual franchise locations, and this method saves companies a tremendous amount of money.

Deciding if a business is ready for any of these supply chain strategies is solely dependent on the location's demand for consumer goods. Buying trucks, for example, may alleviate some initial problems and make inventory shortages much less frequent, but if it raises the overall cost of the products, then it is not justified. As previously mentioned, many common supply chain strategies can be solved simply by pressuring the distributor to find affordable solutions in order to keep the business relationship active. More often than not, they will be highly motivated to comply.

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