Master Your Supply Chain
More than ever, software companies and consultancies are trying to sell small businesses on supply-chain management. And who can blame them? Coordinating suppliers and distributors with automated ease is efficient and attractive. But the reality is that many small businesses lack the funds or the technology for such solutions.
Gregg Bell, for one, is not about to spend thousands systemizing the delivery of his handcrafted goods from Mexico to New York City, home of Mayan Dreams Imports, his $300,000 business. Bell gets great results just by smartly managing his middlemen and suppliers -- a group of business partners in Mexico without whom Mayan Dreams would become a nightmare.
It took nearly four years of trial and error for Bell to work out his system. The first step was finding a reliable agent to be an intermediary between Bell and his suppliers. Many of his suppliers are artisans who can't start working until they've received cash to buy materials. The agent serves as a banker to the artisans, taking a 15% cut of whatever Bell sends him and dishing it out to individual artisans, along with Bell's order. The smallest agent error can have a huge impact on whether Bell meets the demands of his customers -- American wholesalers.
Once, Bell placed a $3,000 order for clay candleholders and got a truckload of figurines instead. Seeking a refund from the artisan would have taken forever. From then on, Bell lined up alternative suppliers to handle potential emergencies. To this day, he keeps a mental inventory of which craftspeople excel at which crafts and which ones produce faster than others do. "I learned to work within the limitations of the suppliers," he says. "Some produce only on their own schedules, so it's up to me to anticipate their timing."
The other key middlemen for Bell are his brokers, the people who handle the paperwork and act as shipping supervisors. Bell maintains frequent contact with brokers to ensure that they remember him. "Brokers can have as many as 20 to 100 clients," he says. "Your goods can definitely get lost in the cracks."
In bigger businesses, the broker is often a full-time employee. That's not economically viable for Bell, who makes up to 12 shipments a year. But he does put in extra effort, flying down to Mexico five times a year to get face time with the middlemen and the suppliers. The airfare, about $2,000 a year, is a small price to pay, he says. How important are the visits? All Bell knows is, he hasn't had a shipment go awry in the past two years. "Quality control in Mexico is hard to do from New York," he says. "When it's a $5,000 order, you just don't want to mess it up."