Small businesses define themselves by what they sell. Ask, and they will tell you:
"We sell truck tires."
"I have an e-commerce store for my jewelry."
If a small business buys items to supply their market and sells them (after assembly or not) to other companies, then it is a supply chain business. Not thinking of a B2B oriented business as part of a global industry supply chain is a big mistake. Small businesses in America are big business when taken collectively, with firms comprised of one owner/operator up to 20 workers making up 97 percent of all companies in the United States. Treating a small business like a big business means not only planning for rough times but planning to support growth.
A lot of people tell small business owners to "fake it 'til you make it." That's a way to sell yourself short and tick off your customer base. If a small business is open and the payroll is being made then congratulations - you've made it! Now stop faking it and start planning to make more of it.
Controlling inventory and its associated costs is a massive part of supply chain management. Why? Inventory once paid for, received, and shelved, can end up being a considerable expense. In fact, if a small business owner feels that they’re barely above water despite the profit on the books, it’s time to look at the cost of carrying inventoryand how it punches a hole in the profits. Your actual cost of goods needs to factor in the following KPIs:
- Cost of goods
- Cost of warehouse space
- Cost of storage including shelving, bins, materials handling equipment etc
- Cost of employee service from receiving to putting it on a truck