July 28, 2014
Every entrepreneur, especially one looking to bring a physical product to market, knows that one of the biggest challenges in scaling an emerging business is controlling costs.
Startups have been obviously huge the past few years. Everyone associates startups with Tech, Apps and Social Media, especially with stories in the news like Facebook’s $19 Billion acquisition of social messaging platform WhatsApp. But there’s also been huge growth in startups that produce actual physical goods. (Think Google’s $3.2 Billion acquisition of Nest for example, the maker of interconnected home electronics like thermostats).
What makes so many of these new physical goods startups successful is their emphasis on highly innovative products. Whether it’s innovation in technology or in their ability to incorporate sustainability in their product offering, these companies have an acute understanding of both the product side and the market they're in. But every entrepreneur, especially one looking to bring a physical product to market, knows that one of the biggest challenges in scaling an emerging business is controlling costs.
That’s why Supply Chain innovation is so important. Some of our most interesting clients we work with are highly innovative startups who are very aware of the need to scale their operations. We’ve worked with some great startups in the past 36 months in a variety of industries, everything from Organic Food Production to Alternative Energy, to assist them hire the right strategic talent and help them scale their Supply Chain operations.
New companies are well-served by a skilled Supply Chain leader who can help with sourcing, manufacturing best practices, logistics, distribution, and other crucial considerations when it comes to bringing a product to market at scale. They can help keep inventory down and uncover efficiencies that young companies might not have considered – thus paying for themselves many times over. There are many senior-level Supply Chain professionals eager to break away from the big company mold and get in on the exciting ground floor of innovative, high-growth companies, even with all the bumps in the road, because this is where they can make a real difference.
It also bears mentioning that even for startups not offering a physical product, Procurement can offer huge value: true Strategic Sourcing as opposed to more common transactional purchasing can be extremely valuable when it comes to scaling a business. One of the biggest ways that costs can get out of hand in a rapidly-scaling business is in “indirect costs,” (as opposed to “direct” costs of physical materials and parts that go into manufacturing, which isn’t really a consideration for startups offering a service or web/mobile application). These indirect costs include everything from real estate, rent and facilities to business services, IT, staffing, travel and general office expenses. Some of the most forward-thinking Procurement Professionals in our network for example work within these indirect categories and understand the leading edge initiatives to save companies money as they grow. They help negotiate with vendors to keep these costs down. Strategic Sourcing Professionals can think strategically to anticipate future procurement needs, and find innovative sources and alternatives for goods and services that a startup needs to grow and scale effectively.
And, another resource available for startup companies looking to scale their operations properly is to deploy specialty interim Contractors in the Supply Chain space. These individuals offer a nimble workforce for growing companies which is a highly flexible model for Project Management, Operations, Planning, Procurement, Supply Chain and Logistics staffing. Contracting is growing in popularity and there are many excellent, very senior experts from a cross-section of industries with both large companies and rapid-growth companies who have helped companies scale before, and can be brought in on a project-by-project basis. Hiring a specialist on contract who can help keep a company’s Supply Chain efficient can be a great alternative to a permanent employee when scaling a business.
There are many alternatives available for companies scaling up. We are happy to discuss how we can help. If you or someone you know is scaling a startup, feel free to contact me to discuss what we have done and how we can help. And of course, please feel free to share this with any entrepreneurs in your network!
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