Supply Chain Management : Acquiring Suppliers and Streamlining the Supply Chain

BEFORE READING THIS WATCH THIS VIDEO Click Here!         An important part for any business is the acquisition of suppliers and contractors ; they help to maintain a business by supplying stock, supplies and services.  There are a few important factors to consider while selecting suppliers such as ; shipping costs and time, duties and other customs taxes, as well as what the supply requirements of the business are.

Product Oriented Business

        Businesses that have a high amount of product sales need regular replenishment from suppliers.  Depending on what the product is; it may take a number of suppliers for one finished good, or perhaps the good is completed by one supplier.  These can be acquired through speaking with business customers and other similar businesses in the industry, as well as researching on the internet and industry databases.
       Shipping costs will increase depending on the size of the product, example; a small product with high volume minimizes shipping costs per unit, so it can be purchased from a greater distance, whereas a large product will have a high shipping cost per unit so it would be wise to have it made close by.
       Duties and customs taxes are different for each type of good; this information can be found at customs websites for each country.  If a business is supplied domestically customs are not an issue for supply-side, but a business being supplied over foreign borders should be concerned with the duty levy rates for their goods.
       The supply requirements of a business are important to determine which suppliers can meet volume and production time requirements for the product.  Some suppliers specialize in short run time for small quantities of product, whereas others have a longer time requirement and production minimums.  With multiple pieces from different suppliers for a product to be completed, it is important to streamline their delivery for minimum wait times and stocking costs.  Choosing the mix of suppliers is unique to each business, with similarities in industries, but differences for each stage the business is at.
      A good resource for sourcing supplies is global trade websites such as TradeKey (http://tradekey.com) and Alibaba (http://alibaba.net) ; browsing these types of sites can provide information on global market prices at different quantities, displaying possibilities for future growth and production.

Service Oriented Business

      Businesses which offer a service will likely not require as many suppliers to complete a product which they sell.  The difference is service oriented businesses may require a greater amount of outsourcing for administration purposes and other departments which can be easily outsourced to third party contractors (ie. web programming, advertising and service design)  Also, not unlike a product oriented business, these service firms require marketing materials for promotion.
     These third party contractors and marketing materials can usually be found locally, as well as online.  Search for marketing materials in a search engine, also a good resource for sourcing contractors is E-Lance ; (http://elance.com) it is a resource for freelancers and businesses to connect from all over the world, any type of business service can be found here.

Streamlining the Supply and Value Chain

    Optimizing workflows and supply chains can maximize value in a business by lowering costs due to stagnant inventory and disorganization.  Having supplies and services delivered in a timely and complete manner can increase the efficiency and value of a business; by acquiring the right suppliers and contractors a business can run effectively with little disturbance.  The correct mix can be found be spending time researching different resources and trying different combinations and practices.  Also by adhering to industry standards, which can be learned in business practice, interacting with suppliers becomes more simple as a business becomes more similar to the norm in ordering and logistics.  There is a lot of potential value in an established business, it can be propelled further with a solid supply chain and effective outsourcing.

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Business Planning - Business Action Plan: Complete Projects Effectively and Efficiently

       The following is a business planning tool which I have designed to help complete projects for a business efficiently and effectively.  Use this tool with a new business idea and its projects to help advance market positioning! I call it a Business Action Plan

Business Action Plan

1      Purpose – Ex Ante summary

Summarize the purpose of a project in a few sentences. What is the business trying to achieve in the short to medium-term? What is the focus of this project.

2      Objectives – micro goals

In order to achieve the purpose of the project some goals must be established.  Three to Five goals should be set that fulfill the ultimate purpose.  Sub-projects can me be to more easily measure the requirements and effectiveness of each project, instead of one convoluted project which may confuse elements.  The objectives which are created are the potential outcome of sub-projects.

3      Purposed Tasks – projects required to complete

To complete an objective as well as sub-projects, tasks must be completed.  Depending on the type of project and business, these tasks can differ greatly.  Imagine what is to be completed; how will it be initiated? How will it be mobilized? How will it be carried out? What is the conclusion of this project?  These are the sub-projects which reach the short to medium-term business objective.  List all relevant, most importantly potentially effective, tasks that meet objective requirements.

4      Requirements – requirements for projects

Each task that is set will require resources, whether it is time or raw materials, these will be needed to carry out each task.  List the tasks required for the project, followed by what resource, service, and time requirements will be needed for completion.  Before a project is carried out the resource and budget requirement can be estimated using market prices and wages.

5      Budget – budget requirements and outcome

Using information from the requirements of each sub-project, a budget can be built to estimate the potential cost of the project.  Create a budget using estimated costs and revenues of the projects.  Depending on the type of project, the forecast for the project should display a positive return; there are ways that externalities of the project can be included in forecasting.  If it is a cost-based project, the results of a campaign, or other intangible result, can be measured using different methods.

6      Conclusion - notes

Summarize the purpose and objectives of the action plan; a statement about how this project will affect the standing of the business, or how it will be advanced can be made.  Any other pertinent notes reviewing the action plan should be placed here.

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Michael Porter's Five Forces Model - Competition and Market Entry

Source

Porter's Five Forces Model was developed by Michael Porter between 1960-70; it is a tool to analyze the competitiveness of a business.  It is a useful tool to analyze competitors as well as the business itself, also useful to understand potential competitors when entering a new marketplace or industry.
Applying these factors to an existing business may help it fix some flaws, and develop a clearer plan.
Rivalry Among Existing Firms - These factors are essentially the industry standard; understanding the industry standard will help a new business develop proper practices for dealing with customers and suppliers and interact efficiently in the marketplace with little friction.

Threat of New Entrants - What factors determine whether or not new firms would like to enter a marketplace?  Demand in the marketplace can drive up prices making industries in short supply attractive for new investment; this is one factor.  Understanding many of these conditions and their state in the market may help to reveal attractive new businesses.

Supplier Power - Suppliers are an important aspect to a business which require a lot of materials or services to operate.  These determining factors may affect a business more or less depending on the type of business it is.

Buyer Power - Similar to supplier power, customers of a product or service may have significant influence over a business.  Customers may be other firms which have the potential to purchase a supplier if is considered economic.

Threat of Substitutes - Substitute products and services can become much more attractive to customers depending on the state of the economy; given local price levels and wage rates, or other factors.

Using an existing or new business idea, develop an analysis using Porter's Five Forces Model;  it may help to reveal new ideas, or a new understanding of a business. 

What an Economist Does; Topics on Economics for Business

    
     I'm not sure what economists really do; there are so many differing opinions, schools of thought, and types of economists.  Basic understanding of economics can be very beneficial for starting a small business and maintaining it.  Some topics include; macro (national and monetary economics) and microeconomics (economics of a firm), cost-benefit analysis and econometrics (statistics).

Small Business Marketing - Effective CPC (cost-per-click) Advertising, Using Facebook and Google

       With CPC advertising a business can effectively reach new customers by directing advertising at people interested in your product or service.  Because there are so many users on Facebook and Google data can be aggregated and analyzed easily for advertisers to display products and services directly to customers that might be interested.  This is very useful tool for small businesses; based on the amount attention you would like your ads to receive, as well as the budget you are willing to spend (it can be infinite $$$), you can generate additional traffic to a website and higher sales conversion to interested consumers.

The process is essentially the same for both Facebook and Google, but there are some slight differences.

Facebook -

Facebook uses interests and demographics to target advertising.  To place an ad you must choose which interests, age groups and geographic locations; there are a number of tools for adding interests and locations.  Once these have been chosen, there are number of options for how you would like to place your ad.  These are described in detail on the Facebook Ads page, but essentially you can either choose to receive more likes, or attract more attention to the page in general. Once this is complete a budget can be set by day or month, a suggested bid per click is given which may be followed or not (lower bids are ineffective, as Facebook has calculated a minimum, higher bids achieve slightly better results) and the duration of the campaign.  There is a detailed application for managing ads and viewing their performance; check this regularly to makes changes to ads and see how effective they are.   Facebook regularly updates their advertising program, making it easier and easier to promote posts; make sure that it is understood what these changes are, and use the new tools provided.

Tips :
- Promote a product or service directly, do not promote random posts from the business' page.
- Provide discounts or other promotional devices in advertisements, these draw a lot more attention from purchasing consumers
- link to the main website if applicable
- short and sweet ads! get your point across in recognizable, keyword phrases.

Google - Google Ad-Words -  http://adwords.google.com

The process for advertising with Google is very similar.  Instead of using interests, Google uses search terms and web analytics.  Using the Google Keyword tool (which has recently been updated) search for keywords from a Facebook page or website for the business or product.  These keywords can be used to target advertisements to the consumers that would be interested in the business, and show up when these people are searching for relevant keywords.  Choose keywords that describe the product, set a budget per click, or overall; Google is very good at automatically determining an effective budget and CPC.  Check back often to Google's advertising management page to determine the success of an ad, results on Google Ad-Words are quite fast!
  Using Google advertising also increases a business' relevance in the search database; this means the website or Facebook page will show up higher in the results of a search which include keywords applied to the website.  SEO (search engine optimization), key-wording, and increasing the search relevance of a website can be a very complex process, there are many experts online that provide this service.  Advertising success on Google to increase sales conversion on a website is largely dependant on SEO and keywords to drive traffic to a website.

Tips:
-Watch the budget, Google advertising expense can get out of hand
-Try different advertising strategies

Good luck implementing a new CPC advertising campaign!

Small Business - Social Media Marketing, Online Advertising

The age of social media is upon us whether we like it or not.  Almost everyone uses some form of social media at some point in the day; by having your business displayed amongst these media outlets more potential customers can discover your business.

Depending on your business social media may offer a new way to generate customers and build brand prestige that was not before possible.  A business can exist based on exposure through social media without ever physically interacting with consumers.  If a business cannot sell a product directly through social media it can definately benefit by exposing itself to a larger audience potentially generating contracts.

There are a few widely used form of social media that should be used ;

Facebook - Facebook has a tool which is meant to promote businesses and communities ; Facebook Pages.  It is a very handy tool for a small business because it can also be a free website for customers to collect information about a business.  Facebook also has their own advertising program which can be effective if implemented correctly.  Another article will speak about correctly using cost-per-click (CPC) advertising.

Twitter - Twitter is a widely used tool for updating your following with regular statuses.  Connecting with other businesses on Twitter , having users share your updates , and generating extra exposure are all benefits of Twitter.

Pinterest - Pinterest is an amazing tool for a business with a tangible product.  Users share their favorite things in every category ; especially new products!  As well , Pinterest has the highest sales conversion of any social media tool!

 This means generating attention on Pinterest is most likely to generate additional sales, so this tool is an obvious choice.

Instagram - With Instagram it is incredibly  easy to connect with other users, share a product or service to a wide but specific audience using hashtags, connect with suppliers and customers that you would never find anywhere else.  Also using pictures and text a lot of information can be conveyed quickly; users may be drawn by the picture but read advertising in captions.  It can generate buzz very quickly as widely followed users can easily promote unknown users.

Other considerations - Tumblr, LinkedIn, Google+ and Blogger, Yelp and Foursquare for retail locations

Stay posted for more on small business, business planning and starting a new business!

Business Planning - Business Plan Features

                  With all of the information that has been gathered proceeding the inception of the business idea,  a well-thought business plan can be created to guide a new business through its first year.  Planning out the first year of the business is very important; a business will either make it or break it in its first year, this is not to say the business is making money, but it is generating interest, acclaim and increasing revenues.  If a business is hemorrhaging money or remaining stagnant, it should be re-evaluated.  With a business plan in place it will be easy to refer back to in the case of negative performance, or a good benchmark in the case of positive business performance.  Working through the creation of a business plan uncovers many things and aggregates different ideas into one clear plan.

The following is a summary of what a business plan for the first year might look like;

- Title Page - this will have your business name, logo and contact information

- Table of Contents

1. Executive Summary


- A brief description of your business, including industry sector, the market you will serve and your competitive advantage

- The purpose of your business plan, whether it’s to secure financing, attract an executive team or to lay-out your long-term strategy

- description of your product or service, its stage of development and its competitive advantages

- description of critical factors that will make a difference to your success, as well as your most vulnerable areas and how you plan to guard against them

- outline of the legal structure of your company

 - summary of your management team’s experience and credentials

 - list of potential customers, and a description of your market potential

 - description of your financial forecasts and how they were determined

 - Your financing requirements (if any), and how and when the money will be paid back

 - If you have an existing company, include a brief company history and the company’s achievements

2. Business Profile

 What is your legally registered business name?

What is your trade name (if different than above)?

What is the contact information for your business (address, phone and fax numbers, email address)?

Is this a new or existing business?

What date was your business established?

What form of ownership does your business have?

·         Sole proprietorship              Date of trade name registration:

·         Partnership                           Date of registration:

·         Corporation                           Date of incorporation:

What products or services does your business provide?

What industry sector do you operate in?

·         Retail

·         Manufacturing

·         Service

·         Franchise

·         Other _______________________________________________

Your business objectives-

What are the key objectives of your business in the short term (first year)?

What are the key objectives of your business in the long term (three to five years)? 

Growth expectations and strategy-

Where do you expect your business to be at the end of this year, in three years and in five years?

How will you achieve this growth in the first year?

3. Ownership and Management

Ownership 

Who are the owners of your business, and what is each owner’s percentage share of the company?

Management and Advisors 

What are the major categories of business management in your company? (e.g., marketing, sales, administration, etc.

Who is on your company’s management team? In addition to a resume, include a short biography of each member of your management team to the appendix, including their management strengths, credentials and commitment level.

Who is on your company’s board of directors or board of advisors? In addition to a resume, include a short biography of each member of your board to the appendix, including their credentials and commitment level

Professional services

Will you engage the services of an accountant, lawyer, banker or other consultants?

4. Business Environment Analysis

History 

If your business is already operating, summarize your business from the time it was started to date, including work done to date and sales you have made.

 

Industry overview - VERY IMPORTANT; I have noted industry and market analysis in previous posts, it is very important to consider a new business' place in the market and industry.

What is the total size of your industry? (e.g., potential sales, number of

customers, etc.)

Who are the major players in your industry?

What are the critical success factors for your industry?

What kind of long term outlook does your industry have?

Are there seasonal factors that affect the industry?

Are there economic factors that affect the industry? (e.g., interest rates, taxes, consumer spending, economic cycle, currency rates, etc.)

Are there government factors that affect the industry? (e.g., regulatory, free

trade, etc.)

Are there social factors that affect the industry? (e.g., current affairs, trends, fads, etc.)

Are there technological factors that affect the industry? (e.g., changes that could affect production or the nature of your product, etc.)

Are there environmental factors that affect the industry? (e.g., pollution regulations, recycling)

Industry position

What are the strengths of your product or service?

What are the weaknesses of your product or service?

Why is your product or service unique?

How will you protect what makes your product or service unique? (e.g., patent, trademark, copyright, etc.)

What are the barriers to entry in your industry? (e.g., technology, investment, patents or trademarks) In other words, how easy is it for your competitors to duplicate your unique product or service?

Answering these questions thoroughly will likely help to make the best decision for entering a marketplace, or to develop a new niche or help to fill an under-served industry or geographic area.  These factors have a strong force on your business, how you react to them is part of your marketing plan.

5.  Marketing Plan - ALSO VERY IMPORTANT; along with the business environment analysis, marketing considerations are also very important.  These two aspects of the business plan help to complete a Porter's Five Forces analysis; many of the items you may include in the Five Forces model will be found here.

Target market 

Who buys your products or services?

What is the size of your target market in dollar terms?

What is your share of this market?

What is the geographic area of your target market?

 What is your competitors’ share of the market?

How do you segment your customer base?

What are the key trends or changes you anticipate within your target market for the short and long terms? 

Competitors 

Who are your major competitors?

What are the strengths and weaknesses of your competitors?

What type of threat do your competitors pose to your business and its growth potential?

Competitive advantages

Why would customers prefer your product or service to that of your competitors?

What are the specific benefits of your products or services?

How will your products or services meet the needs of your target market?

Do you have any trademarks, copyrights, licenses or guarantees associated with

your products or services?

 

Sales and marketing planning 

What market research have you conducted? Attach detailed research to the appendix.

How will you attract customers?

How will you advertise your products or services? (e.g. direct mail, online, radio, newspaper, etc.)

How will you distribute your products or services? (e.g. mail, wholesaler, retail,

online, etc.)

6 . Operations 

Location

Where will your business operate?

How large is your office and/or factory?

What are the terms of any lease(s) related to your location?

 

Equipment

What are the terms of any lease(s) related to equipment you require in order to operate your business? 

Suppliers

Who are your major suppliers? If possible, include letters of intent from suppliers in the appendix.

How easily can you switch suppliers?

What payment terms do you have with your suppliers? Include supporting documentation in the appendix.

Do you have established Service Level Agreements with your suppliers? 

Cost Centres

What are your overhead costs? Include supporting documentation in the appendix.

How are overhead costs allocated?

How much do your products or services cost to provide? Include supporting documentation in the appendix.

What are your inventory costing and control methods? Include supporting

documentation in the appendix.

 

Human resources

How many full-time and part-time employees do you have?

Add to appendix:

·         The number of employees you will have in your first year, second year and third year

·         List titles and salaries for those employees

Sales

Do you have established sales and sales support processes?

Will you utilize a direct sales force, inside sales etc.?

How will orders be processed? How will invoices be processed?

 

Customer Service

How will you handle customer complaints? Do you have a customer service

telephone number for customers to contact you?

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