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On your desk sits a prototype of your idea. You have already performed a viability analysis on the product and its supporting business and everything looks promising. Now it is time to move your product from the concept phase through manufacturing so you can deliver it via your online platform. If you’re new to supply chain and manufacturing, take a look at the following tips.
Use Local Resources
The first part of the supply chain that needs to be addressed is material management. Without the raw materials to make your product, your company will come to a standstill. When looking for your materials vendors, sustainability is the goal. Sustainable materials are ones that are available when you need them, renewable so you can have them in the future, and socially sound so you are not harming the community.
As a new player in manufacturing, you may not be able to benefit from global vendors. Instead, look at local, community vendors to give your company a sustainable inflow of raw materials. Because they are geographically local, word-of-mouth or a RFP advertisement in a community newspaper will bring some of the best vendors to your door.
Rent or Own Your Warehouse
A large aspect of manufacturing is warehousing. You need to store the number of products that you will sell, which takes space. In a perfect world, you would buy your warehouse in an area where the property value is going up faster than your investment rate of return so the building can be empty and still be a good investment. In the real world, however, you probably should rent space in a multi-client warehouse that fits your budget, production and distribution parameters. UPS, being a leader in distribution, is a good place to look. They offer help with warehousing as well as productivity and distribution.
Know When to Outsource and When to Insource
Overhead is one part of the supply chain that requires a sophisticated understanding of your manufacturing needs. This is where outsourcing and insourcing decisions come into play. While cost is a large factor in this decision, there are other factors that you need to consider. Amway is a good example of a company that had to perform a comprehensive analysis of its outsourcing activities. For some of their products, they found that having a “Made in America” sticker was worth the extra cost because it helped them leverage sales. However, according to Forbes, they continued to outsource some of their products because of shipping costs.
For your business, take a look at your overhead needs and make a well-informed decision about insourcing versus outsourcing. Look at your employee, production, and storage costs as well as how it will affect your manufacturing and shipping processes, marketing and sales.
Manage Your Finances
You need to have accurate financial statements to run your business efficiently. The manufacturing industry does not have the same accounting as sales or service industries. To get financial statements that you can use to grow your manufacturing business, you need to use activity-based costing. This accounting method allocates all costs, from raw materials to overhead and sales, to your manufacturing process. This gives you an accurate number for the cost of manufacturing per product.
Make Your Marketing Omnichannel
Don’t wait until you’re ready to sell your product on your online platform to start marketing it. You should begin your marketing efforts all the way back when you’re making your vendor selection. Your marketing should have a social media component for every aspect of your supply chain. It should be multidirectional, also called omnichannel, so your customers are part of every marketing conversation. Your product and how it will improve your customers’ lives should be the center of your marketing communication.
