Strategic Supply Chain Design: A Foundational Element for Startups Success

When entrepreneurs create an innovative product, their primary focus may not be on their supply chain. Initiating supply chain design early in the process allows the proactive identification of risks and bottlenecks prior to launch. Collaborating with suppliers and shipping partners in advance aids in risk reduction builds robust relationships, and can prove to be vital when incidents occur. Forbes predicts that the global e-commerce market will reach a total value of $6.3 trillion in 2023. As a result, entrepreneurs must prioritize shipping and distribution as part of the foundation of their company's success. Strategic planning can lead to improved customer service, cost management, and increased capability to scale the business.

I recently encountered a situation when I backed a captivating smart home product on Kickstarter. The company had received a massive influx of pre-orders and their supply chain was ill-prepared. Focus was solely on the design and manufacturing of the product with the assumption that courier shipping was sufficient for all their needs. Thousands of late and missing shipments caused a downward spiral of reviews. Despite their best efforts to expand the brand with new products, the damage to their reputation had already been done.

To avoid such pitfalls, it is crucial to prepare your supply chain in advance. Integration requires careful planning and coordination early in the pre-launch period. 

Utilizing carriers' automated tracking services into your platform should be seriously considered as it empowers your customer service team to stay ahead in tracking, tracing, and providing timely updates to your customers. Although challenges are inevitable, having a robust plan in place can help prevent disastrous incidents that could jeopardize your business, such as the example with the Kickstarter company.

Taking a proactive approach to managing your inventory can help control cost expenditures. Commonly when inventory remains idle for extended periods, storage costs are incurred every month. However, inventory shortages lead to customer frustrations when the product is back ordered for several weeks. According to Forbes research, a substantial 22 percent of customers abandon their shopping sessions because shipping is too slow. Given Amazon Prime setting the benchmark of 2-day shipping, external brands simply cannot take a week or more for shipping, as this would risk losing valuable customers to competitors.

In today's market, customers have come to expect free shipping, which necessitates predicting and integrating shipping costs into overall product expenses. Cost management has become more crucial than ever. Without the careful design of the supply chain in advance, fast and free shipping quickly becomes expensive- especially for large products requiring LTL (Less Than Truckload) shipping. The importance of establishing and relying on partnerships with shipping providers and supply chain professionals to mitigate risks and reduce shipping costs cannot be overstated.

"Strategic planning can lead to improved customer service, cost management, and increased capability to scale the business"

The ability to scale your business hinges on a well-structured supply chain. Handling a surge in orders requires preparation in advance and leaning on the expertise of your shipping partners. Establishing those key relationships early and trusting your partners will grant a competitive advantage and propel your company ahead of competing brands. By leaning on the experience of a seasoned supply chain professional, you can anticipate potential challenges and proactively address them in advance. Moreover, a streamlined supply chain enables you to expand into new markets, seize those opportunities for growth, and build a solid reputation for reliability and customer satisfaction.

In conclusion, the success of an innovative product goes beyond its creation; it heavily relies on a well-designed and proactive supply chain. The story of the smart home product on Kickstarter serves as a cautionary tale, highlighting the importance of preemptively planning your supply chain. Ultimately, a robust supply chain lays the foundation for a resilient and competitive company that can navigate uncertainties and fulfill customer expectations efficiently.