Quality Control Tips Every Brand Should Know

Posted on by Kaylyn Perry

Effective quality control helps businesses protect profits while increasing customer satisfaction and improving productivity. Quality control usually requires additional resources and investment but it should not be optional for businesses. Even if your business is just starting out with low production volumes, it’s important to pay attention to quality control. As your company grows you can quickly lose sight of quality causing sales to decline. It’s easier to consistently monitor quality and make necessary changes rather than encounter serious problems that you have to solve. 

How can quality control affect a company?

If you want to keep your company strong all around, you should focus on quality control. Quality control can affect just about every aspect of a company. For the purpose of simplicity, we will focus on four main ways quality control can affect a company.

#1. Productivity

Quality control problems can slow down production. In some cases companies may try to cut costs by using low quality machinery and systems. While this may save money up front, it will likely cost you money sooner than later. Low quality parts often experience mechanical breakdown which can interfere with production. A  slowdown or stoppage of production can affect other areas of the company such as sales and revenue.

#2. Profitability

Quality and profits have a strong correlation. If companies effectively manage quality in all areas, they should be repaid in profits. Managing quality requires teamwork from various departments within a company. Companies that place a strong focus on quality control can create a work environment that prioritizes quality. By having employees that are focused on quality control, you should be able to address any potential issues early on. In addition, your front line people that are hands-on every day may have some of the best solutions for quality control issues. 

#3. Customer satisfaction

Customers want quality products.  Achieving high customer satisfaction should result in five star reviews and high customer satisfaction survey rankings. As a result, websites are likely to rank your products higher which can drive traffic to your products and increase sales. Companies that produce high quality products are likely to capture repeat customers. In addition, customers are likely to refer to companies with high quality products. Companies with high quality products can increase word-of-mouth advertising, which is usually free. 

#4. Costs

There are many ways a business can cut costs. However, in some cases cutting costs may also reduce quality. For example, using cheaper manufacturing parts or machinery may cut costs up front but the long term effects can be expensive. Another example is using cheaper software to manage customer orders and accounts. Again, this may be cheaper initially but it may be harder to use and less effective than a more expensive software. While you may cut costs initially, employees may be frustrated and customer satisfaction may be suffering. Companies must find machinery, systems, and parts that offer value. We are not saying that companies should go purchase the most expensive of everything. However, companies should focus on the value and quality of anything that will impact their business.

What should a quality control program consist of?

Quality control (QC) programs require a plan that outlines your organization’s standard operating procedures. Standard operating procedures provide a reference for clients and employees of how things are done and what will be delivered. Depending on the level of the company, QC standards could vary. It’s important that a QC program is user friendly and understood by all employees. In order to create an effective program companies should research, plan, and  communicate. In addition, the program should be evaluated on a regular basis. Continuous improvement is usually necessary to maintain an effective QC program.

Do small businesses need quality control?

Meeting customer expectations is important no matter how big or small a company is. Small businesses may not have the funds to advertise like a large business, thus increasing the importance of quality control. Brand loyalty can be improved by producing quality products which can help small businesses grow without dumping large sums of money into advertising. Quality control can also help brands establish a good reputation and encourage customer reviews. If small businesses want to be sustainable and achieve growth goals they should focus on quality control starting at day one. 

Does quality control only apply to products?

Quality control should be applied to all departments within a company. While it’s important to deliver high quality products, it’s also important to have quality back office systems. You may be delivering quality products but if your bookkeeping is inaccurate, your company may face serious issues that could lead to failure. Quality control provides the opportunity for businesses to improve overall operations. Improving operations allows companies to become better and better than their competition. If you are a small company that is unsure of how to implement quality control programs you can find online classes to put you on the right track. In the early stages you may be able to manage quality control on your own. However, as the company grows it’s important to keep up with the growth and bring in additional quality control management if needed.

Quality control will increase my cost, can I borrow more money?

Implementing and investing in quality control typically increases costs in the beginning. In order to enforce quality quality programs companies may need a QC professional or team. In addition, the company may need to invest more into actually producing the product. Perhaps the company is using a manufacturer with unreliable machinery that breaks down often. To meet quality control standards the company may need to use a manufacturer with reliable machinery who can deliver quality products on time consistently. However, investing in quality control can increase revenue and save money in the long-term. Quality control can ensure the success of your business. So how do companies afford higher initial costs? Small businesses may qualify for SBA loans or other types of financing. If traditional loans are not providing enough funds, you may need to consider inventory financing. Kickfurther can provide affordable inventory financing for small businesses.

Grow your business with Kickfurther

In most cases, growing a business requires investment. If you are reading this, you have our vote of confidence already. The desire to implement quality control programs and produce high quality products is where success begins. In some cases, entrepreneurs just want to find the cheapest way  to do things. While they may have good initial sales due to a desirable product concept, it’s likely their company will fail shortly after due to a quality control issue. If you want to deliver high quality products but are on a tight budget, you should consider inventory financing. 

Kickfurther is designed to help small businesses secure inventory financing without giving up equity in the company. Kickfurther allows small businesses to recruit supporters to buy inventory on consignment.  To get started, small businesses can create proposals including a time frame for producing goods, a specified rate of return, and a schedule for repayment. 

Wrapping Up

In order to implement and execute quality control programs, your business needs to have cash available. High quality products will likely cost more to acquire or produce. However, it’s likely that you will be able to sell them for more money. It’s common for businesses to use inventory financing. Small businesses may be reluctant to use financing because it can increase costs. In addition, bank loans or traditional business financing may be challenging to qualify for. Finding affordable inventory financing can be challenging, that is until now. Kickfurther is committed to helping businesses secure affordable inventory financing. If your company needs inventory financing for physical products and has proven sales, create a business account at Kickfurther.com today. 

Deliver high quality products for customers. . . apply for inventory financing today!

Outsourced vs. Domestic Manufacturing: Pros & Cons

Posted on by Kaylyn Perry

Should you outsource production or manufacture it domestically? While one option may be cheaper than the other, you should compare the pros and cons of each option. Keeping costs down is important but the cost of a product is not everything. With the recent pandemic, we have seen many companies that use domestic manufacturing have a leg up on companies that outsource. Domestic manufacturing can improve quality, efficiency, and branding. Companies that produce products domestically may have more flexibility to alter products for the better. Some companies may have to start by outsourcing internationally until the company is large enough and profitable enough to support domestic manufacturing. Outsourcing usually requires less investment which can be helpful for companies that are tight on cash. Whether you use domestic manufacturing or international outsourcing, there are financing options available. After you determine which option is best for your business you can move onto uncovering financing. For now, let’s learn more about outsourcing internationally versus domestic manufacturing. 

Pros & Cons of domestic manufacturing

Partnering with a domestic manufacturer can allow businesses to be closer to their product. In addition, consumers may look up to your company for supporting the local economy and creating jobs. While it may cost more to use a domestic manufacturer, it may add value to your product. Companies that manufacture products in the United States must abide by labor standards, thus creating better work environments. Domestic manufacturing is usually preferred by companies with specialized products that need to be delivered reliably. However, outsourcing to a foriegn manufacturer can reduce costs by as much as 80%. Here are some of the benefits and drawbacks of domestic manufacturing.

Pros:

#1. Intellectual property right protection

Domestic manufacturing helps protect your product. Domestic manufacturers are required to maintain strict intellectual property right protections.

#2. Faster turnaround

Products can be produced and delivered faster using a domestic manufacturer. Avoiding customs and overseas shipping can save businesses a lot of hassle. 

#3. Better communication and relationships

Domestic manufacturers should share the same first language. This can improve communication and decrease the risk of error due to miscommunication. In addition, if you need to address anything you should have easy access to meet face to face with a domestic manufacturer. 

#4. Higher labor standards

Domestic manufacturers usually have higher standards that are enforced to create better and safer working environments for employees. 

#5. Increased product and brand value 

In most cases, consumers have a higher perceived value for American made products. Customers are likely to pay more for American-made products and be more brand loyal. 

#6. Flexible payment options

Most American manufacturers offer flexible payment or financing plans. 

#7. Reduced shipping costs

Shipping products domestically is cheaper and easier than shipping products overseas. Products shipped overseas may incur customs fees in addition to basic shipping fees. 

Cons:

#1. Higher product cost

In most cases, it’s more expensive to produce products domestically. While the higher product costs may be considered a con, many of the factors that cause increased costs are listed on the pro list. When determining whether to produce domestically or internationally you should take into account all costs. Domestic manufacturing may have higher product costs but it may have much lower shipping costs. 

#2. Limited production

Domestic manufacturers may not be able to produce high volume orders. Domestic manufacturers typically have higher overhead costs than internal manufacturers resulting in limited production capacity.

https://www.pivotint.com/blog/pros-and-cons-international-vs-domestic-manufacturing/

Pros & cons of international  outsourcing

In order to make good business decisions you need to be well educated on available options. Therefore, as a business owner you have to consider a cheaper way to produce products, which is usually international outsourcing. International outsourcing can be very tempting when you compare numbers. However, there are many other components you should consider such as shipping and customs fees. You should also consider any quality differences between domestically produced products and internationally produced products. If you are able to find a trusted international manufacturer you should be able to successfully outsource products. Unfortunately, this is easier said than done. Here are some of the pros and cons of international outsourcing. 

Pros:

#1. Reduced costs

International outsourcing can be significantly cheaper than domestic manufacturing. This is one of the major reasons that companies choose international manufacturing. 

#2. Find manufacturers online

As international outsourcing is necessary for many businesses, more and more platforms are becoming available to help connect international manufacturers and domestic businesses. This allows businesses to source international manufacturers without traveling initially. However, navigating your way through language barriers can be exhausting and a bit concerning at times. 

#3. More options available

For some types of products you may find more international manufacturers that can assist. International manufacturers can produce high and low end products. 

Cons:

#1. Communication barriers

Communication with international manufacturers can be challenging. In addition, you may have different standards as to what is acceptable. If you are going to use an international manufacturer you should take some time to learn more about their culture. This can help you know what to expect when working with them. 

#2. Higher shipping costs

While your product cost may be cheaper with an international manufacturer, your shipping costs will most likely be much higher. In addition, you may incur other fees for bringing products overseas. You should calculate all fees into your total product estimate before making any decisions. 

#3. Less control

It may be difficult to visit international manufacturers regularly making it difficult to know how the facilities are being run. Are your products being made in an ecological wasteland? If you partner with an international manufacturer, you should hire a third party or personally make trips to the facilities. This can eliminate any potential negative press. 

#4. More risk for a stolen idea

International manufacturers do not have to follow the U.S. intellectual property laws. While it’s uncommon for ideas to be stolen, it’s more likely to happen when using an international manufacturer. 

Grow your business with Kickfurther

Inventory can tie up a large portion of cash flow whether it’s produced internationally or domestically. However, without a highly demanded quality product, your business will likely experience failure. As a startup or small business you may have tunnel vision on numbers as you try to cover all expenses with a tight budget. You may be reluctant to turn to financing but it may be necessary. Businesses that need affordable inventory financing should visit Kickfurther. Kickfurther takes a unique approach to crowdfunding that allows supporters to purchase inventory on consignment. Businesses can secure the inventory financing they need at a price they can afford without giving up equity in the company. Kickfurther was founded by Sean De Clercq, an entrepreneur who was once in your shoes. After becoming frustrated by the lack of affordable options for inventory financing, he launched Kickfurther in 20154. 

Wrapping Up

Whether you decide to outsource internationally or manufacture domestically, you may need inventory financing. Some domestic manufacturers may be able to provide financing options. However, most international manufacturers do not provide any type of financing. Kickfurther fully supports the success of small businesses by helping them secure affordable inventory financing. With 800+ deals funded and a 99.5% success rate, there’s no doubt that Kickfurther can help your business get the inventory financing it needs.  To get started, small businesses can create proposals including a time frame for producing goods, a specified rate of return, and a schedule for repayment. Kickfurther creates a community for business owners, fans, and supporters. When inventory sells, supporters get their money back. Business and supporters share a common goal with us which leverages success. 

Join the powerful Kickfurther community today and secure the inventory financing you need!

Important Tips for Effective Logistics Management

Posted on by Kaylyn Perry

When it comes to managing a business, a well-oiled logistics department is fundamental to success. Having an understanding of how resources are managed and moved throughout the supply chain allows businesses to determine inefficiencies that may be affecting the overall process. While it sounds straightforward, logistics management is often dependent on a plethora of different factors that affect each facet of the business.

Think of logistics management as the spine of your business. Without it, it would be difficult for the other aspects of your business to function and hit the ground running. From initial production to the timely delivery of goods, logistics management plays a significant role in improving a company’s internal operations while positively affecting its bottom line.

In this article, we will take a look at some of the most valuable tips to better manage your logistical needs and highlight factors that underscore its importance. 

What is logistics management?

In business, logistics management is a subprocess of the extensive supply chain management umbrella. It specifically refers to the process of effectively and efficiently managing goods from procurement to consumption. In simpler terms, proper logistics management ensures that a company – at any given moment – has the ability to procure the right amount of goods and secure enough inventory to be able to satisfy customer demand.

Logistics and Supply Chain Management: Are they the same?

While sometimes used interchangeably, logistics and supply chain management are two different concepts. Logistics management, as mentioned above, is part of the overarching concept of supply chain management. Supply chain management encompasses the full spectrum of supply chain activities from the sourcing of raw material to the delivery of the finished product. As a result, companies that pay attention to their supply chain processes can gain a competitive advantage in the marketplace.

Another key difference between logistics and supply chain management is that logistics management is primarily focused on satisfying customer demand. On the other hand, supply chain management oversees the entire production process for a particular good or service while also streamlining the delivery process.

What is the importance of logistics management?

Why is logistics management important? Without logistics management, a business would most likely miss out on various opportunities to make its processes leaner and more cost-effective. An efficient logistics management plan enables you to monitor and improve your business’ logistics operations to develop a more systematic flow of goods throughout the supply chain.

How can poor logistics management affect your business?

As mentioned above, logistics management is one of the most important (if not the most important) aspects of your business. Effective logistics management is crucial as it directly affects your business’ productivity as well as your ability to meet customer demand. But what happens to your business if you have poor logistics management practices?

  • Delivery delays – Poor logistics management can lead to inefficiencies that will result in delivery delays. Moreover, delays can have a direct impact on the shelf-life of your products and could affect their overall quality.
  • Low customer satisfaction – Everyone knows that maintaining a great relationship with your customers is a great way to ensure that your customers keep coming back. An inefficient logistics management process can cause late deliveries, spoiled/defective products, and loss of customers.
  • Loss of profit – If you cannot maintain optimal delivery times due to poor logistics management, your relationship with your customers is bound to decline. Remember, losing potential and/or repeat customers means loss of profit.

What are some valuable tips for effective logistics management?

Note that there is no all-encompassing strategy when it comes to logistics management. A company’s logistics management plan should take into consideration the intricacy of a company’s entire logistics operation, the type of products or services that they are offering, and the various risk factors surrounding each product.

In essence, before developing a logistics management plan, it would be wise to first take a look into your business’s unique needs in order to determine plans and strategies that would best fit the current state of your operations. Now that we got that out of the way, check out some valuable tips for effective logistics management.

Determine your goals

As with any solid plan, you first need to determine the key goals that you would like to achieve. In order to implement a great logistics management strategy, business owners would have to identify internal logistics goals and objectives from increasing efficiency to reducing transportation and logistics costs. Without a concrete goal, it would be difficult for businesses to develop a plan that would improve their logistics management operations. Some of the most common goals of logistics management are:

  • Make processes leaner
  • Put measures in place to better manage risk
  • Ensure great inventory turnover
  • Improve the quality of service
  • Aim to reduce overall costs

Plan, plan, and plan some more!

Now that you have specific goals in mind, it’s now time to devise a plan that would help you achieve those objectives. Logistics planning anticipates the risks, challenges, and other parameters as well as the time, transportation, and cost involved in the logistics process. Having a solid plan in place would enable businesses to better track, control, and deliver goods.

 However, no matter how robust a logistics plan is, unforeseen circumstances will always keep you on your toes. For this, you need a contingency plan.

Always have a contingency plan

Even an experienced logistics manager, if you decide to hire one, will supplement your logistics plan with a contingency plan in case something goes wrong. One of the main benefits of having a contingency plan is that it eliminates spur-of-the-moment decisions during crises and serves as a guide for every possible eventuality. Put simply, a contingency plan keeps your goods moving despite any obstacle.

Hire a logistics manager

Depending on the size of your operation, hiring a logistics manager could help you keep track of your logistics needs especially when your business is experiencing rapid growth. Typically, logistics managers are up-to-date when it comes to the latest logistics technology as well as the modern techniques on how to maximize your business’ entire logistics operation.

However, the best thing that a logistics manager will bring to your business is that they will allow you to focus on your core competencies. As a business owner, your focus should be expanding the business as well as improving each aspect of your operation. Fortunately, a logistics manager will give you peace of mind knowing that an expert is handling one of the most essential processes in your business.

Leverage the power of automation

It’s no secret that logistics depend on the timely delivery of goods or services. In the digital age, technology has revolutionized how businesses can make the entire supply chain leaner and cost-effective. One such tool is automation. In technology, automation refers to the reduction of human intervention in certain business facets that require tedious and repeatable functions. In introducing automation to your logistics operation, human error would be eliminated and data can be monitored and tracked in real-time.

Use data to your advantage

In addition to automation, the rise of big data has made it possible for businesses to identify new opportunities, make smarter business decisions, and improve various functions. Whether it’s shipping or warehousing, almost all logistics processes now depend on data to ensure maximum value. The great thing about data is that it’s unbiased and transparent. Data derived from logistics operations play an important role in the optimization of the procurement process, inventory management, and shipping. Using data to your advantage also enables you to monitor your performance by identifying and keeping track of the necessary metrics and key performance indicators (KPIs).

Logistics should align with inventory management

One important thing to keep in mind is that logistics should be aligned with your inventory management practices. Inventory management is a function of logistics that focuses on the products that a company sells to its customers. When developing a logistics management plan, it is vital to come up with an inventory management strategy that best fits your business model, sourcing method, and fulfillment system.

A robust inventory management system ensures that your business has the right amount of stock, at the right time, to fulfill customer demand. It will also minimize storage costs, avoid stockouts and excess stock, improve cash flow, and guarantee customer retention. Like poor logistics management, poor inventory management can lead to harmful implications that could hurt your business’s finances. Keeping an accurate stock record means you have complete oversight of how much cash you have tied up in your inventory.

Pro tip: For those experiencing cash flow issues due to poor inventory management, you can check out Kickfurther. Kickfurther is the world’s first online inventory financing platform that enables companies to access funds that they are unable to acquire through traditional sources. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules, allowing your brand to scale quickly without impeding your ability to maintain inventory or financial flexibility.

Final Thoughts

Without a plan and an implementation strategy, these tips will remain just that: tips. Unfortunately, there’s no such thing as an all-encompassing “best logistics management method” or “best logistics management plan” out there that would help you manage your logistics processes better. What works best for your business depends on a plethora of factors that only you would be able to identify. While it seems tedious, it is a necessary undertaking to ensure the success of your business.

3PL: Finding the Best Third-Party Logistics Provider for Your Business

Posted on by Kaylyn Perry

In this article, we will talk about what third-party logistics (3PL) providers are and how a 3PL can push your business to new heights. Keep on reading to find out more!

What is third-party logistics?

Third-party logistics, also known as 3PL, refers to the outsourcing of a business’ storage, distribution, and fulfillment needs. In business, logistics is a vital part of the all-encompassing supply chain umbrella that focuses on how products are acquired, stored, and delivered to the end consumer. The main role of a third-party logistics partner is to provide structure to the entire logistics operation while also saving the company money on storage and shipping fees. But how exactly does 3PL work?

How does 3PL work?

Put simply, 3PL mainly deals with distribution and fulfillment. It essentially functions as a bridge between the business and the supply chain to make sure that the right amount of products are delivered to the right customer. Here’s a quick rundown on how a 3PL service works:

  • Receiving – Receiving refers to third-party logistics providers receiving a business’s inventory in order to process customer orders. This step involves auditing and recording an accurate log of your inventory to avoid overstocking or stockouts. Receiving is an important part of the 3PL fulfillment process as it enables your 3PL provider to satisfy consumer demand.
  • Picking and packing – When a customer places an order, your 3PL logistics provider should be able to pick the ordered items from the inventory that you sent and update your inventory management software or other fulfillment software to keep an accurate record of your inventory levels. After picking all ordered items, it’s now time to pack! Before going on the road, an order goes through the packing process where a 3PL’s associates would perform quality assurance measures to ensure that only the highest quality of products are picked. Once this step is complete, the 3PL can now arrange for shipment.
  • Shipping – To be a third-party logistics provider, you must have an extensive network of shipping partners that you can rely on. Usually, 3PL providers have the capability to negotiate shipping costs depending on the volume of a client’s orders. The larger the quantity, the bigger the discount.

Why do companies use 3PL providers?

The great thing about 3PL providers is how scalable their services are. Businesses are able to pick and choose which supply chain process they want to outsource as they experience growth. While it’s true that 3PL firms specialize in logistics, the benefits that these firms bring can be felt throughout a company’s operations. Check out some of them below:

  • Cost savings – Perhaps the most common advantage of hiring a 3PL logistics provider is the cost savings. Hiring a 3PL logistics partner eliminates the expenses associated with a company’s procurement and distribution channels. Some of these cost savings include recruiting a logistics manager, handling storage/warehouse fees, and implementing in-house logistics technology. However, for a 3PL partnership to work, businesses must find quality 3PL providers that will continuously find ways to enhance important operations.
  • Access to experienced professionals – If you are just starting out, logistics can be a confusing and tedious operation. What sets outsourcing apart is that it allows businesses to access knowledgeable and seasoned professionals without the need to hire in-house staff. When looking for a 3PL provider, it would be wise to ask about their compliance practices, management systems, data reporting tools, order tracking, and fulfillment network to get a better feel of their capabilities.  
  • Allows businesses to focus on core expertise – Outsourcing your logistics needs frees up valuable time that could be spent on growing your network or expanding your business. Knowing that your logistics operations are being handled by seasoned professionals enables you to have peace of mind and allows you to focus on your core competencies.
  • Boost customer satisfaction – Ultimately, hiring a 3PL fulfillment partner means better services and timely deliveries that boost customer satisfaction. Now that customers expect their purchases to arrive as quickly as possible, partnering with a 3PL allows businesses to offer faster order fulfillment to all of their customers.

How much does it cost to hire a 3PL provider?

The simple answer is: it depends. When considering a 3PL partner, it is important to note that not all businesses are the same. In fact, one huge consideration in 3PL warehouse logistics is the type of product that a business offers and how much it would cost for a 3PL provider to handle it. From receiving and storing to packing and shipping, a 3PL partner is in charge of the entire distribution process so expect to pay for the full service.

However, as mentioned above, the great thing about a 3PL partner is how scalable they are. When you use a third-party logistics company, you can select the type of services that you need most and only pay for those services. This works especially well for startups and other small to medium-sized businesses operating in a distribution-focused industry.

Tips on How to Choose the Best 3PL Provider for Your Business

Outsourcing your logistics needs to a 3PL logistics partner offers a myriad of benefits for a rapidly expanding business. Not only are these providers experts in their field, but 3PL logistics partners are also seasoned veterans that can precisely navigate the ins and outs of the logistics space. If you think hiring a 3PL warehouse logistics partner is right for your business, check out some of the tips we’ve compiled below to help you in your decision-making process.

Understand your supply chain

Having an understanding of your supply chain enables you to find a 3PL partner that’s capable enough to meet your business’s unique needs. As a business owner, it is imperative for you to clearly set expectations based on the metrics you are monitoring and the goals that you are hoping to achieve in the short, medium, and long term. Remember, having an understanding of your supply chain practices allow you to develop coherent strategies and make informed decisions to improve your overall operation.

Ask what services they provide

Can your potential 3PL keep up with your growth? Do they offer services that match your logistical needs? Do they have sound inventory management practices? Do they have an extensive carrier network? How about industry specializations? These are just some of the questions that you should ask your potential 3PL provider to ensure that you have a clear understanding of their capabilities. Every 3PL has its own set of core competencies and can service one industry better than another. It’s about finding a match that can support your operations and scale with you when needed.

Know your technology requirements

Another significant factor to consider, when choosing the best 3PL provider for your business, is to make sure that they have robust technology solutions that can integrate into your software systems. Depending on your technology requirements, a 3PL fulfillment partner should have adequate technological sophistication and know-how to keep up with the changing customer demand. Consider factors such as:

  • Integrations and other relevant software
  • Warehouse/inventory management systems
  • Shipment tracking and order fulfillment systems
  • Data analytics and reporting

Services should align with your metrics

Again, looking for a 3PL partner requires an understanding of your company and what you are planning to achieve. Before you can gauge the success of your partnership, you must first find a 3PL partner that offers services that align with your company’s metrics. Can they improve your delivery rates? Can they keep an accurate real-time record of your inventory? It’s important to keep in mind that an excellent 3PL fulfillment partner should have the necessary technology in place to support industry best practices as well as meet your business’ needs.

Prioritize omnichannel expertise

Now that there are a plethora of retail channels out there, it is certainly ideal for businesses to look for a 3PL partner with omnichannel expertise. For customers, an omnichannel experience refers to the seamless consumption of goods across various channels and choosing a delivery method that ensures maximum customer convenience. This enables businesses to become more agile and personalize how products are presented, whether in-store or online, and distributed to the end consumer.

Conclusion

While partnering with a 3PL logistics partner is a popular option for small to medium-sized businesses, it still depends on what you need. If you’re focused on reducing logistics costs, a 3PL provider can help consolidate shipments depending on the volume of freight. It also puts focus on continuously improving your logistics processes and finding more cost-efficient distribution methods to make shipping quicker and less expensive.

Kickfurther is the world’s first online inventory financing platform that enables companies to access funds that they are unable to acquire through traditional sources. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules, allowing your brand to scale quickly without impeding your ability to maintain inventory or financial flexibility.

What Is Vendor Managed Inventory and How Can It Help Your Business

Posted on by Kaylyn Perry

Vendor Managed Inventory, also known as VMI, is an effective strategy for companies to better manage their supply chain needs. In this article, we will take a closer look at how VMI can help streamline your inventory management processes while also reducing overall administrative costs. Ready? Let’s dive right in!

What is vendor managed inventory?

Vendor managed inventory refers to a supply chain strategy in which a supplier of goods assumes responsibility for the management, supervision, and optimization of a business’s inventory. In a typical VMI arrangement, vendors handle every aspect of a business’s inventory to ensure that they maintain enough stock to satisfy customer demand. Put simply, vendor managed inventories are owned by the vendor but are located and sold at a business’s premises.

To help you better understand the concept of vendor managed inventory, check out this example:

Let’s say a hypothetical superstore named KickMart has an existing VMI relationship with Hisense USA. In this case, the vendor is Hisense USA and the client is KickMart. Hisense USA supplies KickMart with various types of home appliances and makes sure that KickMart maintains optimum stock levels.

For a VMI partnership to be successful, both parties need to establish data-sharing practices to make sure that replenishment calculations are relevant and accurate. The ultimate goal of VMI is to create a seamless process that determines the appropriate re-order quantity based on current demand and agreed-upon stocking levels.

How does vendor managed inventory work?

  • Set expectations. Much like most business relationships, both the vendor and the customer need to agree on specific goals that would define the success of their VMI partnership. This would provide the necessary foundation and structure to the partnership and determine clear roles and responsibilities for each party.
  • Maintain constant communication. For a VMI relationship to work, a close strategic relationship needs to exist between both parties to make sure that necessary information is accessible. Sustained communication fosters increased transparency and mitigates the risk of stockouts or overstocking.
  • Continuous improvement. To optimize important inventory management processes, a VMI partnership should also enable the vendor and the client to freely discuss rooms for improvement. Identifying gaps in your supply chain process allows you to quickly react to market changes and address possible areas of concern.

What is the main difference between vendor managed inventory and traditional inventory management?

The main difference between VMI and traditional inventory management is the way inventory is handled. When it comes to traditional inventory management, a business handles every aspect of the inventory management process from sales forecasting to order fulfillment. On the other hand, a vendor managed inventory shifts the responsibility of inventory management and logistics entirely to the vendor. Customers that partner with a vendor managed inventory services provider enjoy multiple benefits from lower costs to more efficient forecasting capabilities.

Is vendor managed inventory right for you?

If you are a rapidly growing business that manages complex inventory levels and seasonally experience spikes in demand, then a vendor managed inventory strategy may be right for you. A VMI provider can help you streamline your auditing processes to make sure that you are holding just the right amount of inventory at any given time. Some of the biggest retailers that use VMI are Walmart, Bosch, Home Depot, and Amazon.

What are the benefits of vendor managed inventory?

Optimal Stock Levels – When done correctly, vendor managed inventory enables businesses to optimize their stock levels by aligning inventory replenishment practices with existing and potential customer demand. By establishing a seamless inventory management system with a VMI partner, businesses can mitigate the risks surrounding stock levels and only carry the right amount of products.

Improved Forecasting Ability – Another benefit of partnering with a VMI provider is improved demand forecasting for all products. Through the exchange of important sales and demand forecasting data, you and your VMI partner can anticipate trends, sales patterns, and future demand more effectively.

Lower Costs – From lower carrying costs to more efficient inventory management costs, having a VMI partner allows businesses to reduce various supply chain expenses. The vendor managed inventory model also saves businesses money by placing bulk orders which usually secures better discounts.

Improved Data Insights – Along with improving your forecasting ability, partnering with a VMI provider means better data and technology sharing between both parties. This translates into improved data insights which, in return, fosters continuous improvement.

Are there risks involved in the vendor managed inventory process?

Unreliable Supplier – Like most business partnerships, an unreliable partner could spell disaster for your operations. This may sound harsh but you’d be surprised at the number of unreliable suppliers out there. While it takes time to build a trusting relationship, there are some questions you could ask your potential vendor to make sure that you are choosing the right partner:

  • Have you ever partnered with similar businesses?
  • What are your technological capabilities? Will it integrate seamlessly with our processes?
  • Will you be able to come up with a strategic inventory management plan?
  • What type of communication channels do you prefer?
  • Will you be able to personalize and scale our processes in case we grow and expand?

Data Exposure – One significant disadvantage, when working with a third-party provider, is an increased vulnerability from data exposure. And when it comes to working with a VMI, it’s no different. As mentioned above, a VMI partnership only works when both parties establish data-sharing processes that would shed light on gaps in the supply chain processes. However, it also poses security concerns wherein data may be shared with other parties without the business’s consent. While definitely rare, it’s still something to keep in mind before partnering with a vendor managed inventory provider.

Slow Market Response – Changes in customer preferences and the overall market are, at times, impossible to predict. When the market experiences sudden changes, it could be difficult to secure the inventory you need especially if your VMI partner cannot meet your requests due to other contractual obligations.

Are vendor managed inventory and consignment stock the same?

While both concepts sound similar, vendor managed inventory and consignment are two different business principles. The biggest difference between the two is that consignment is a business arrangement that enables a consignee to sell a consignor’s goods. The consignor maintains ownership of the products and is paid by the consignee when inventory is sold. On the other hand, vendor managed inventory is a strategy that shifts the inventory management responsibility from the business to the vendor.

Are there alternatives to VMI?

By now, you may have an idea about what vendor managed inventory really is and the benefits that it can bring to your company. However, if you think a VMI partnership is not right for your business, there are other ways to properly secure and manage your inventory depending on your needs. Take consignment inventory for example. Consignment inventory is a cost-effective way for businesses to maintain stock levels at their stores without the need to pay for the products upfront. It’s a great way to keep your business running while ensuring a predictable cash flow.

If you’re looking for an alternative to vendor inventory financing, check out Kickfurther. Kickfurther is a unique type of inventory consignment platform that helps businesses fund their inventory needs through the help of supporters and fans. Inventory is often offered as a consignment opportunity or Co-Op wherein individual backers can participate in crowdfunding campaigns and, when inventory is sold, businesses pay their investors instead of the bank.

Wrapping Up

As a business, it’s important to regard vendor managed inventory partnerships as a highly collaborative business relationship. When choosing a VMI partner, make sure that they have the necessary industry know-how and the technological capability to be able to cater to your business’s unique needs. In addition, find a vendor that will help you tackle supply chain challenges as well as present opportunities that will help your business thrive and succeed.

Supply Chain Optimization: Tips and Strategies

Posted on by Kaylyn Perry

Increasing digital reliance and evolving customer behavior are making it difficult for businesses to cope in an ever-changing business landscape. Nowadays, keeping up with the latest technological advancements and putting the right strategies in place enable businesses to reinvent the production process to keep up with changes in the market. Without the necessary planning, businesses can experience serious consequences that may put their entire supply chain at risk.

In this article, we will discuss some of the best tips and strategies that you can use in order to optimize your entire supply chain. Keep reading to find out more!

What does the term supply chain mean?

Now that customers are expecting to receive their goods quicker than ever, optimizing the supply chain management process has become a pivotal factor that can either bring success or failure to a business. But first, what exactly does the term supply chain mean?

In business, supply chain refers to the process of managing the efficient flow of goods and services from procurement to production. It puts emphasis on the coordination and management of people, information, and resources needed to deliver goods or services to the consumer.

What is supply chain optimization?

As the name implies, supply chain optimization means improving the entire production cycle while minimizing operational costs. However, it’s not as simple as it sounds. When it comes to supply chain optimization, businesses need to consider all possible eventualities to be able to plan for risks and other factors that could derail an order.

Pro tip: Make sure that your supply chain optimization efforts are aligned with your company’s overall goals. Supply chain management, from manufacturing to distribution, should match a company’s general performance metrics for easier tracking and to ensure competitive success.

What are the benefits of supply chain optimization?

Let us be the first to tell you that supply chain optimization is no easy feat. Yet, effective supply chain optimization and management offer a plethora of benefits that can improve customer satisfaction and your bottom line. Check out the most common benefits of supply chain optimization:

  • Helps an organization reduce costs
  • Better collaboration among departments
  • Increases the efficiency of production processes
  • Boosts revenue and profitability
  • Higher efficiency rate
  • Higher customer satisfaction
  • Improved supplier relations
  • Mitigates risk
  • Provides a more agile structure
  • Enables a business to focus on core strengths

Supply Chain Optimization: Tips and Strategies

While there is no single best strategy to ensure supply chain success, there are tips and strategies that businesses can keep in mind to achieve an optimal supply chain process. Here are eight tips that businesses should consider when optimizing their supply chain:

Put a Supply Chain Management Plan in Place

A critical process in supply chain optimization is putting a supply chain management plan in place. While it may seem complicated, supply chain planning simply involves developing a strategy that analyzes the entire production process to ultimately improve the way goods and services are delivered to consumers. A supply chain management plan should also take into account the demand for products as well as every eventuality that may impede the delivery of goods. Overall, a supply chain management plan should:

  • Outline a company’s supply chain goals
  • Perform research on industry best practices
  • Determine clear procurement policies
  • Establish quality assurance standards
  • Consider international and local laws and regulations

Conduct Forecasting Analysis to Optimize Inventory

Forecasting is another important aspect of the supply chain optimization process as it enables businesses to make informed decisions based on acquired data. Typically, conducting forecasting analysis to optimize inventory involves predicting how much inventory you should have on hand in order to meet future demand. This is achieved through understanding product seasonality, identifying sales trends, and putting focus on inventory forecasting.

For those unfamiliar with inventory forecasting, it is a method that involves the analysis of historical data and past sales trends. It also takes an in-depth look into various factors such as inventory turnover, lead time demand, optimal reordering point, as well as safety stock.

Calculate Your Business’ Optimal Inventory Levels

Wondering how to calculate optimal inventory levels? Unfortunately, optimal inventory levels are unique to each business. Again, there are different factors to consider when calculating your business’s optimal inventory levels. Two forecasting methods that you can use are qualitative and quantitative forecasting.

  • Qualitative forecasting – Often characterized as non-mathematical and subjective, qualitative forecasting involves predicting future demand based on trends, seasonality, and current economic climate. It also enables businesses to consider external factors that may influence consumer behavior.
  • Quantitative forecasting – On the other hand, quantitative forecasting uses concrete data when predicting future customer demand. Quantitative forecasting takes historical data into account to determine a product’s future demand and future sales performance. While qualitative forecasting mainly relies on trends and opinion, quantitative forecasting is based on numerical information that is not susceptible to misinterpretation or potential prejudice.

Have the Right Amount of Safety Stock

As mentioned above, calculating the right amount of safety stock is important when it comes to supply chain optimization. Safety stock refers to the extra items held by a business to reduce the risk of stockouts. It essentially serves as a buffer that would enable your business to meet customer demand regardless of unforeseen circumstances. To calculate your business’ safety stock, check out the formula below:

 (Maximum daily usage x Maximum lead time) – (Average daily usage x Average time in days) = Safety Stock

Take Note of Important Supply Chain Metrics

To identify opportunities for improvement in your supply chain, you must be able to keep track of important supply chain metrics. Monitoring specific key performance indicators (KPIs) will help you identify supply chain inefficiencies that could be affecting your overall performance. Some of these metrics include, but are not limited to, inventory turnover, perfect order rate, delivery time, inventory to sales ratio, carrying cost of inventory, and logistics and transport costs.

Take Advantage of Emerging Technology

Taking advantage of emerging technology enables your business to quickly keep up with innovations in your industry. It also allows you to develop comprehensive strategies and make informed decisions to improve your bottom line.

Nurture a Healthy Relationship With Your Suppliers

It’s no secret that developing and nurturing a strong business relationship with your suppliers means gaining long-term benefits for your business. The stronger the relationship you have with your suppliers, the likelier it is for you to take advantage of dedicated service, discounts, and increased operational efficiency.

Put an Inventory Management Strategy in Place

Inventory management refers to the process of streamlining the flow of inventory to keep track of your stock from the moment it arrives at your warehouse until it has been shipped to a customer. From sourcing to fulfillment, inventory management plays a significant role in ensuring that a business is running as smoothly and as efficiently as possible. If you fail to handle your inventory successfully, it can lead to loss of profit and even business failure.

To avoid this, businesses can make use of various inventory optimization strategies such as the Just-in-Time (JIT) Method, dropshipping, cross-docking, ABC analysis, Economic Order Quantity (EOQ), and consignment inventory.

Pro tip: If you’re seriously considering inventory consignment as a practical strategy for inventory optimization, you should check out Kickfurther. Kickfurther is an inventory financing platform that empowers businesses to scale and grow through the support of individual investors. The way Kickfurther works is that it matches your business with like-minded investors or people that already support your business. This innovative funding platform is a great way for businesses to test market demand while raising the necessary funds to finance their inventory. And, when you sell your inventory successfully, you pay your supporters and not the bank.

Wrapping Up

At the end of the day, there’s no such thing as the “best supply chain optimization strategy.” While supply chain optimization seems like a tedious process, it’s important to understand that it does not only improve critical business processes but also directly affects the overall customer experience. It can also help businesses distinguish potential risks and accurately evaluate various factors to achieve maximum efficiency.