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Ade Olabode: Business Owner, Don’t Run Out-of-Stock! Here are 3 Things To Know About Supply Chain

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More Downloads-12 Does Supply chain sound boring? What if I told you that this is one of the areas in business that is often neglected, but can prove important for survival and growth? This cuts across sectors: retail or manufacturing. I have been advising business owners for years and I can see the different dynamics at play when we talk about supply chain management. These dynamics often revolve around the personalities of the business owners.

Yes, no one knows more about a business than the business owner but the work of an external analyst or advisor is to review the business processes in place and advise the business owners by providing suggestions and recommendations. As a business owner your supply chain must be clean for better business results. Below are the reasons why you need to keep your supply chain clean:

On-time delivery
It is important to keep in mind the state of Nigerian infrastructure. Of importance here are transportation system and electricity. Regardless of the business type or model, we will agree that the necessity for a good transportation cannot be overemphasised. If you are into retail, you need to buy your stock – products for sale from your suppliers before you can sell to your own customers. Having a good supply system makes supplying stock to you, more efficient. Also, if you are a manufacturer you may have to deliver goods to your customers, hence the need to have something really robust in place. You certainly don’t want to run out of stock to sell.

Minimising or eradicating theft
This is also not in isolation of your business type. Whether you are a retailer or a manufacturer, you will always have goods (or products) in stock (you probably run some form of warehousing). Having a good supply chain will ensure you at least understand the state of your stock. You know the quantity of goods in stock and their condition. Of course, you need to perform regular stock-take (stock-count) to fully have a proper grip of your inventory. Essentially, knowing the quantity supplied to your warehouses ensures you have a proper basis and you can detect issues of theft.

Cost reduction
A good supply chain mechanism makes life easier in terms of efficiency but it also ensures you are able to negotiate for better deals. You can negotiate for lower prices when purchasing in bulk. You also get to reduce your transportation cost as you understand the number of purchases required based on the quantity of goods.

The reasons for having a proper and efficient supply chain mechanism in place are definitely more than the three outlined above but these are the essentials.
Now that we know the reasons why we need a good supply chain system, how then can we put it in place? This should answer the questions of tools and services we can leverage upon.

Sort out your logistics
How do you move your goods from your supplier to your store or warehouse? You may need to use a standard logistics company or even have an arrangement with a reputable transportation firm. This is essential as you are able to build trust by leveraging on your patronage with them. This means you enjoy reliability and you are able to avoid theft. Also, it is better to find out if they are insured, this means you are protected against any loss. Some transportation firms actually have trackers which monitor the movement of their vehicles, so do your research before choosing a firm.

Invest in an Inventory Management tool
You need a supply chain you can trust. Supply chain is not restricted to logistics. You also need an inventory management tool that will ensure you have a complete picture of what you have in stock. You want to track what was supplied, what has been sold and of course, what you have left in stock. All of which ensures you have a hang of what is really going on. Remember a regular stock-take is required to get the full benefit from your inventory management tool.

Have the right business practice
A good business has well defined business policies. These will cover all aspects of the business. You definitely want your staff to behave in certain positive ways to ensure you are able to achieve your business objectives. A good example is ensuring a regular stock-take is performed, as mentioned in #2 above. Having a good return policy is also a good business practice.

Retail business is not just about buying and selling. It involves a lot more as explained above. Understand what it takes to have the right logistic system. Understand your inventory process by having the right tool and performing a regular stock-take. You should also ensure your employees conform to the set business practices in place.

Do you have a thorough understanding of supply chain management? It will be good to hear your views and other readers can also learn a thing or two from your practical experience. Kindly drop your comment in the comments section below.

P.S. On a side note, we’re excited to launch PrognoStore to our Nigerian customers on April 27th at Leadway Protea Hotel. I will be coming into town for this event and if you’re a small business owner (who also happens to read my columns here on Bellanaija), then I’ve got tickets for you. But you need to hurry as there are only 10 slots available. Cheers!

Photo Credit: Foto.com.ng

Papa Olabode is an adviser to small business owners. He's the co-founder & CEO of PrognoStore (www.prognostore.com), the Point-of-Sale Software for small businesses. PrognoStore is a 3-in-1 solution as it combines point-of-Sale, Inventory and Analytics to be all you need to run your store. He's a chartered accountant and has previously worked at Deloitte, Credit Suisse and co-founded HGE Capital. Follow on Twitter @papaolabode

14 Comments

  1. Xiomara

    April 14, 2016 at 4:06 pm

    Nice one, Ade….a pity most businesses in Nigeria especially start -up’s haven’t quite grasped the workings of inventory management. would be looking out for more of your articles.

    • Ade

      April 14, 2016 at 5:59 pm

      Hello Xiomara, I actually think people are starting to grasp the importance of monitoring their inventory. At the end of the day, there’s no point running a store without knowing what you have in stock. BTW, thanks for reading & will definitely be on the lookout for your comments going forward.

  2. Dorcas

    April 14, 2016 at 4:08 pm

    Thanks for the information and weldone. Hope to get one of your free tickets.

    • Ade

      April 14, 2016 at 5:55 pm

      Hi Dorcas, no worries…look forward to seeing you at the event! Cheers

    • Mis Mayaki

      April 17, 2016 at 10:03 pm

      Hi Ade,

      Can I get a ticket as well please?

  3. Oghogho

    April 14, 2016 at 8:48 pm

    This is an interesting piece! My hubby and i have a growing food business and would like to learn more about supply chain and other information to help our business grow, any chance of getting a free ticket?

    • Ade

      April 14, 2016 at 9:11 pm

      Hi Oghogho, yes it will be great to have you guys! Please click on the link above to get your tickets. Thx

  4. treasure

    April 15, 2016 at 12:04 am

    Right now my business is kinda up and down. I buy from retailers and my cost price has increased so much. Increasing my selling price seems to reduce my chance of sales plus there are so many alternatives, some not so quality though. The challenge I have is convincing customers that they are getting their money’s worth. Also marketing to get new customers. I’ve started using social media (that’s all I can afford for now) but I know I am not getting as much publicity as I would like. Any tips please?

  5. Teekay

    April 15, 2016 at 8:10 am

    Hi ade is there any course on supply chain procurement and suppy in nigeria

    • Asake Okin

      April 17, 2016 at 2:06 pm

      I know two professional certification if that counts.
      1. CPIM (Certified Production and Inventory Management)
      2. CIPS (The Chartered Institute of Procurement and Supply)

  6. Asake

    April 15, 2016 at 9:38 am

    Insightful write up.

    The other girl in my life works in Supply Chain. She should be 4 years in the field very soon.

    Yes Supply Chain is not boring. The life of most supply chain personnel reset at most every 24hrs

    I see SC a very integral part of any business. It is a chain of units that comes together to ensure Supply happens i.e. the job of a Supply Chain person ends when the product is on shelf at the right cost, right quality and in the right place and the producing/servicing company has received value.

    Supply Chain Includes Planning, Procurement, Manufacturing, Logistics, Quality, Engineering, Importation & Exportation of Finished Goods

    So how do organization determine what to produce or sell?

    A planner works with the commercial part of the business to get realistic forecast (aka Sales plan) for say 0- 24months (depending on your organization) using market trends, assumptions, seasonality etc. Then translated into materials to be used in production. Procurement team would have looked for a supplier, negotiated price, operating terms and continuously manage supplier relationship. The material is then gotten from the supplier( a lot of other activities happen within this space) to be used in production, before sourcing the material – another planner would have check while working with the manufacturing team to know if the machine they can produce in house or use a third party manufacturing site. During and after production – quality checks are done to ensure the produced product is within the agreed specification before it is then released to the logistics team for shipping out. The team has to ensure the right product is shipped to the right customer at the right price and in the right condition. Once the customer pays for the goods or services – then the supply chain task is completed.

    In my view, businesses should focus on

    SERVICE -makes the customer comes back – includes quality products, respect for delivering time, on shelf availability of product, after sales service etc. Make sure you implement a service metrics and track it religiously. Both internal and external customers are very important. I remember going for a customer service training and one of the key call out for me was “

    COST – Anyone that has worked in Supply Chain knows that to remain competitive, you have to continue reducing waste in your organization and In SC, waste means anything that does not add value and the customer will not be willing to pay for. While reducing cost, remember quality and sustainability matters a lot. In bid to reduce cost, imagine if you are found using underage workers – you cannot lose your business, get fined by the government and of course dent your image.

    CASH – Stop tying down your business funds in slow moving products. Use the 80-20% principle to determine your fast and slow lines. It guides your inventory policies and also when you need to make tradeoffs, you know what to focus on. Yes, implement a payment terms – pay on delivery, 50% down payment, payment after 30 days – are all examples of payment terms. Know what works for your cash-flow, industry and business.

    SUSTANBILTY
    Let say you are into paper making and you keep cutting down trees without replanting – what will happen to your business in 50 years’ time if everyone does not replant like you? What are you doing to help the community you are sourcing your major material from?

    Sorry for the long message

    • Mercy

      April 15, 2016 at 8:55 pm

      Well done on the good work, Mr Ade

      Asake
      wow, that was elaborate!

      Thank you two. I applaud.

  7. Tuoyo. Austin. Eeye

    April 15, 2016 at 2:56 pm

    Hello Ade. Thx 2 u for d wonderful job u doing. Pls we do operate a male fashion shop, and we hv been running it on a brick n mortar level. Pls it’s there any way we can get help from u guy’s on how 2 automate it. Also what’s d address of the protea hotel. Thx

  8. Busola

    May 19, 2016 at 12:50 pm

    Thanks for the information. Please am into cyber cafe/ business centre, Could you give me some tips on how to check my employees on theft. thanks

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