6 Tips Startups Should use to Improve Their Supply Chain Management

Stimulus, Inc.
7 min readJul 24, 2022

Did you know that roughly 90% of startups fail? Do we have your attention with that harrowing statistic? If so, good. As a startup owner, it’s statistics like these that can be discouraging, scary, and make you feel like you have to work overtime to succeed. Fortunately, the true key to a successful startup is knowing what strategies to use from day one to build a foundation that will never crumble.

Business woman explaining strategy to colleagues

One of the main pieces of this foundation is your supply chain and the ways in which you run it. For many startups, the causes of failure are not making enough money in the first year, selling low-quality goods, not having a good production and shipping process, and not selling the right products. Considering that these failures all stem from an unsuccessful supply chain with bad supplier relationships, it makes sense why many industry experts believe that supply chain management is required knowledge even before you begin to sell anything or make any vendor arrangements. Fortunately, we at Stimulus have compiled these six tips and tricks below to help you perfect your supply chain and succeed as a startup in doing so. Without further ado, let’s get started, shall we?

Effective Supply Chain Management Strategies for Startup Founders

The main thing to remember when reading these strategies is that managers focus on execution, while leaders focus on developing and empowering others. With that in mind, we’ve centered this guide around empowerment and building trust above all else — and we know our strategies work. Simply implement these strategies in your own startup and see what building an empathetic and progressive supply chain community can do for you.

  1. Support Local Suppliers

As a local startup, it only makes sense that you would opt to work with other local owners above massive faceless and apathetic vendors online. Imagine being able to meet with your vendor in person, share a coffee with them, and explain your wants and needs directly instead of simply filling out forms and hoping they meet your needs. This is just one of the many perks of working with local smaller vendors.

According to a study by Intuit, 70% of Americans shop small and prefer local vendors over massive suppliers and companies. It’s the same reason why Etsy has 81.9 million active buyers all happily opting for bespoke and local products that may even cost more than the same ones found in massive retailers across the country.

As a startup, appealing to the human nature of your customers is a great way to entice them to buy from your shop not just to support your team, but the local vendors you work with as well. In fact, you can even increase your prices to reflect the local vendor costs unabashedly and still retain a larger customer base. According to a recent survey by Zypmedia, 53% of consumers indicated that they are more likely to buy from a local business instead of a national retailer even if it costs them more money to do so.

Lastly, working with smaller vendors has also been proven to help companies greatly when it comes to their inventory management as well. The reason for this is that it takes far less time to have your products delivered locally meaning less storage needs and stock tracking for you and your team. This means local procurement can actually benefit your team and increase your profits on top of everything else.

2. Embrace Diversity

Although this also ties in to the vendors you utilize for many of the same reasons that supporting local vendors does, the main goal is to work with vendors that care and that appeal to your customer base likewise. With the embrace of diversity becoming a major aspect of our society thanks to the modern generations, now more than ever, companies should be opting to support diverse companies and vendors for success.

In fact, according to McKinsey, “45% of consumers in the United States agree that companies should pledge to support Black-owned brands, suppliers, and vendors.” It was also shared in this report that 90 percent of Gen Z shoppers believe companies should address racial equality and Gen Zers are also 1.4 times more likely to say that inclusivity is one of the most important factors in their buying decisions.

If you are a BIPOC or femme-presenting startup owner, this aspect of your vendor relationships should be of the utmost importance to you and your team. Being able to not only share the diversity of your company but your supply chain network as well is a great way to appeal to these modern buyers and create relationships built upon mutual understanding and strength.

3. Build Healthy Vendor Relationships

As you begin to grow your vendor and supplier list, it’s time to focus on what makes a strong and unwavering vendor relationship. The key factors that create the best relationships between companies and their suppliers are as follows: communication, consistency, forethought, referrals, and defining the relationship in detail at every new juncture.

For starters, when beginning a relationship with a new vendor, start by defining that relationship in detail. Tell them your honest wants and needs and define their expectations of your team in return. This will ensure that nothing becomes cloudy or confusing as the structure will be there from the start to guide you both.

Secondly, be sure to not just practice consistency in your payments but your expectations for every season as well. Use forethought and seasonal demand analyses to give them lead time when delivering your goods. This is especially considerate and useful when working with smaller vendors that may need more time to procure and ship higher quantities for busy streaks like Christmas and Summer.

Thirdly, providing referrals for your vendors helps you to connect not only with your suppliers on a deeper level but with other startups. This can help you become a great resource in your industry and receive similar referrals in return.

Lastly, at every step of this process, communication is everything. This is why we recommend a supply chain that is focused on communication and networking above all else. While you could always create this network on your own, there are plenty of highly convenient and intuitive supply chain technology platforms that can make this process a walk in the park for you and your team. But, we’ll discuss the use of progressive tech to benefit your startup’s supply chain in further detail below.

4. Establish Eco-Friendly Initiatives

One of the most important things that consumers, employees, and vendors all look for in companies these days is their ability to offer eco-friendly products and services. In fact, according to a recent study, 72% of consumers reported that they were actively buying more environmentally friendly products than they did five years ago, while 81% said they expected to buy even more over the next five years.

It was also found that consumers would rather buy from companies with eco-friendly suppliers and shipping services even if it cost more to do so. For startups, this transition to more eco-friendly packaging and vendor resources is exactly how to get noticed in all the right ways by the modern consumer base.

By establishing connections with green vendors and using environmentally-friendly packaging, you can appeal to these younger consumers and also reap the benefits of being a green-friendly brand such as being featured in eco-friendly brand lists, earning quality seals, and attending sustainable brands conventions — all of which is free marketing for your startup as you grow your industry presence.

5. Analyze and Improve Procedures Regularly

Although having a strong network of reliable vendors at your disposal makes up a huge part of a successful supply chain, your procedures and analytics are just as critical for the continual improvement process. Recognizing trends, finding bottlenecks, determining disruptors, using risk assessment to your benefit, and figuring out the logistics behind every step of the supply chain is how you not only retain customers but keep gaining new ones from referrals and reviews.

When tracking your supply chain, you will want to pay close attention to the demand satisfaction rate, perfect order rate, and supplier metrics. We discuss all of these elements and more in our recent article, ‘The Great Resignation’: How Supply Chain Management can Help. By tracking these analytics specifically, you can see where you, your team, and your suppliers need to improve as well as where you are succeeding to adapt and refine your supply chain moving forward.

6. Utilize Progressive Technology

Lastly, with so many analytics and relationships to keep track of for a successful supply chain as a startup owner, it truly pays (in profits and time) to use technology to your benefit. At Stimulus, our platform provides rich, relevant insights and real-time data analysis which can all be tested by your team simply by signing up for a demo with the Stimulus sales team. However, we are not the only technology platform that can help you improve your supply chain as a startup owner.

Other platforms and apps to consider for startup success include:

These are just a few of the countless platforms and apps that can be used to help perfect your supply chain as a startup but it’s best to stay flexible and continue to refine your technology use as a brand while you grow and develop different needs accordingly.

Now that you have six tried and true methods to succeed well past your first year as a startup leader, it’s time to start rethinking your current supply chain and vendors for the betterment of your business and consumer base. After all, as a modern company in a modern world, it’s time your supply chain and vendors reflect your modern values and help you to grow not just as a business connection but a personal connection likewise. With these kinds of unfettered relationships, you are bound to succeed as a team and reap the benefits of intelligent supply chain management in no time.

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Stimulus, Inc.

Stimulus, a relationship intelligence software that helps companies build more valuable vendor and supplier relationships.