Supply Chain professionals at early stage ventures face unique challenges compared to their peers at large. They use many of the same best practices, but it is often the application of these where many professionals stumble. Lean startup principles so often discussed in startup circles, outlined in books like The Lean Startup by Eric Ries, drive home the importance of building an MVP (Minimum Viable Product) which is so critical to early stage hardware companies. Our experience has shown us that the MVP mindset should also be applied to the supply chains that support new technology products. In summary, supply chain operations at early stage ventures and high growth technology companies should be a series of experiments. They should be flexible, temporary, and scalable experiments that are continuously improved as the product and company mature.
Below are four quick contrasts to consider when comparing established company supply chains to the supply chain mindset for an early stage venture:
1. You’re The Seller vs. The Buyer
We have found that the traditional Buyer-Seller dynamics in established company’s supply chains are actually reversed in early stage venture supply chains. Buyers at established companies are accustomed to suppliers pitching and pursuing the company for supply opportunities. At a high growth company supply chain professionals often need a “Sales mindset”. They find themselves cold-calling potential suppliers, and “selling” the supplier on supplying components to the Buyer’s company.
We would recommend any new supply chain professional moving from an established company to a startup to read a few sales books before diving into the role. Pitch Anything by Oren Klaff is a wonderful audio book on pitching ideas and companies. The key is getting good at succinctly explaining the company’s vision and why partnering with the company is a win-win.
2. Execution vs. Optimization
An MVP mindset so often leveraged in engineering product development needs to be carried through to supply chain. Due to the often low volume nature in which new programs start out; it actually works out better to execute the supply chain by running batches of product through the supply chain. Run a series of small experiments, establish a baseline and then improve off the baseline.
3. Partner vs. Negotiate
Focus on identifying mutually beneficial ways both organizations can win and benefit in the short and long term from the partnership. Melanie Billings-Yun’s book Beyond Dealmaking offers an insightful approach and perspective. It is important to attain fair commercial terms, while not dwelling on optimizing every potential negotiation. Instead, focus on establishing a two way communication, technical specifications and program deadlines. In an early stage venture, working with a supply partner to expedite a program by 6 months could lead to critical revenue sooner!
4. Paper Process vs. Heavy Information Systems
Define the process first, even if it is a manual paper process. Once the process is stable, implement information systems to decrease errors and add transparency. This approach will not only save your company valuable time and money, but it will reduce the risk of installing the wrong information system when the business is still forming.
Remember a MVP mindset applies to supply chain too; launch, test, refine, repeat.