Growing your brand: 7 Things you need to have in place before you start
Why do so many companies struggle to thrive or simply fail? It’s not for lack of great ideas for products or lack of passion. Data from the Bureau of Labor Statistics shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.
One of the primary reasons companies struggle to thrive is that when people have an amazing idea, they often focus on product development, production, sourcing, and marketing thinking that once they have the product produced they tell the world how great it is, the rest will take care of itself.
Most of these same people will remember from marketing 101 that growing a successful business is about having the right product, in the right place, at the right time, in the right condition, at the right price. Sounds easy, right? It’s not. The logistics to achieve success is challenging and complicated. There is much to consider and have in place before you launch your brand or expect it to grow. Here are 7 logistics resources and processes you must have in place to successfully launch or grow your business: The building blocks of supply chain.
The first three basic resources you must have in place are warehousing, transportation, and customer service.
WAREHOUSING
When I think about the importance of warehousing, I’m reminded of the quote of World War II leader and U.S. President Dwight D. Eisenhower He said “plans are useless, but planning is indispensable.” Warehousing has to be in place because regardless of how perfect you think your sales forecasts are and how flawlessly logistics will be executed, things will go wrong. Actual demand will never match forecast, and disruptions in the supply chain occur every day from a truck having a flat tire to an associate at the customer’s receiving dock mistakenly refusing a shipment. One way to plan for handling the unexpected inaccuracies of your forecast and disruptions is to have a warehouse that can act as a shock absorber to these bumps in the road. You must have a place to keep inventory for these “just in case” situations that will inevitably happen.
TRANSPORTATION
Transportation simply must be in place because even if you have the most amazing product ever and you can produce it on demand with no lead time, it doesn’t matter if you can’t get it delivered. Your business will fail. A reliable and cost-effective set of transportation resources that can deliver your product within the time frame your customers expect, and at a cost that you can afford, must be in place prior to launching or growing your business.
CUSTOMER SERVICE
The third basic resource you must have in place is customer service. This includes a system or process to receive orders, review for creditworthiness, determine if you have the inventory needed to fulfill the order, communicate the details of the order to the warehouse, and arrange transportation to pick up and deliver the product. In addition, similar to having a warehouse to accommodate the “just in case” situations that occur, you need to have customer service resources in place to manage the issues that arise - plus communicate the situation and manage resolution with your customers. Finally, since the team handling customer service is typically most informed on what actually shipped to the customer, they typically generate the invoicing, which keeps your company in business!
The next three must-haves are not as foundational as warehousing, transportation, and customer service, but they must still be in place to (1) ensure you know if you’re making money or not AND (2) make certain you are maximizing profit. This group of must-haves includes inventory management, retailer compliance, and accounting.
INVENTORY MANAGEMENT
Inventory management is ultimately about knowing what raw materials, work-in-process, and finished goods you have and where. Knowing this, combined with a forecast of future sales, enables you to determine what products to produce, in what quantities, and where finished goods need to be positioned to service your customers. Failure to have resources to manage inventory is a recipe to either lose sales or customers. You either can't fulfill customers' orders or have too much inventory, risking it becoming unsalable or obsolete, leading to donation or destruction of the product. In either case, you will either stunt the growth of the company or fail because the cost exceeds revenue.
RETAILER COMPLIANCE
The next process you must have in place is retailer compliance. This started to become important more than 30 years ago as retailers became increasingly powerful. In an effort to boost their efficiencies, retailers started to demand that suppliers ship product to them in a specific configuration, with very detailed labeling, advance notification, and tight delivery windows when they expected the product to arrive at their receiving dock. Failure to adhere to their requirements results in the supplier either paying what is often onerous fees the retailer simply deducting for a supplier’s failure to comply and leaving the supplier responsible to prove they had complied with the retailer’s requirements. Unfortunately, retailers have become very sophisticated in exploiting this practice - they know that many suppliers either do not have a system in place to ensure every shipment is in compliance, do not have the resources to provide proof of compliance, or simply do not want to take the time to refute the retailer’s fees or deductions, many retailers now see this as a “profit center.” Bottom-line: not having a process in place to both ensure you are in compliance (and then be able to prove you are in compliance) will result in lost profits or business failure.
ACCOUNTING
Having all of the functions and processes mentioned above are critical to have in place, but if you do not have a way to accurately capture, verify, and measure your costs, you may be making decisions that are causing you to lose money. By having the accounting function in place to ensure you are accurately invoicing customers, managing and resolving customer deductions, and auditing transportation and warehousing invoices, you will be able to identify issues and take corrective action, discover opportunities to improve the profitability of your business, and have a compass to help set the direction for continuing to grow your business.
SUPPLY CHAIN STRATEGY
Finally, to maximize the potential of successfully growing your business, you must have a logistics or supply chain strategy. Having a well thought out strategy that takes a holistic view of your business, recognizes how all of the functions mentioned above are interconnected, and is aligned with your service and cost objectives can make the difference between a thriving business versus one that fails. Some of the most important elements of a supply chain strategy that should be completed include:
As you can see, there is much to consider related to the logistics of getting your products to market and resources or processes that need to be in place before you launch your brand or expect it to grow.
What we’ve shared is just a glimpse into the seven building blocks that must be in place to create a foundation for successfully growing your business. We will be exploring each of these in more detail over the weeks ahead. We hope you’ll come back and allow us to be a resource for you to help identify things to consider and help you navigate the challenging and complex world of logistics.
For questions, or if you’re interested in next steps, please drop us a note at hello@yourlogistics.us.
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