SCMAP Perspective is our fortnightly column on PortCalls, tackling the latest developments in the supply chain industry, as well as updates from within SCMAP. On this column, Henrik Batallones ponders how supply chain management does not have to be in service of expanding a business exponentially, but just as equally to better serve an existing market.
Think small
As of this writing, validation of the Section G job blueprint – the result of the groundbreaking partnership between SCMAP, the Philippine Retailers Association and the Department of Trade and Industry – is very much underway. We hope to be able to unveil it in the coming months, so I am not able to provide you any spoilers – sorry.
That said, the process has put my head in that mindspace yet again. On the supply chain front, the challenges are two-prong. One, how can logistics providers better serve retailers of different shapes and stripes? Evolving customer preferences, demographics and retail models mean what worked before no longer works as well now. Just the last five years has seen many upheavals to retail and logistics models, first from the initial shock of lockdowns, and then from the reshaping of how our customers do things after the worst of the pandemic – that much-vaunted “new normal”.
Two, how can retailers, especially small ones just entering the fray, better leverage the strengths of supply chain to make their business more competitive and to better serve their customers? Here, the key is to educate entrepreneurs in supply chain fundamentals, with the hope that they will apply what they’ve learned to their businesses. The earlier they are exposed, the earlier they can take advantage of the many logistics options available to them, from last mile providers to full-fledged logistics options, provided they’re ready for it.
But then, I realize, the prevalent thinking is that supply chain serves to help a business expand its reach. There’s a lot of talk about widening market access and ensuring that retailers are able to take advantage of this, particularly now that e-commerce is prevalent and widely accepted. It’s certainly a noble aim, but I feel “reaching as many customers as possible” isn’t applicable to everyone, and this risks limiting the possibilities supply chain knowledge offers to small businesses.
Sure, supply chain includes logistics, but it’s not all logistics. Supply chain is a way to do business – the way to do business – from start to finish, and back again. Being competitive isn’t just about reaching your customer when they want your products; it’s making sure that what you offer is of value to them, without breaking your bottom line. That starts with finding the right raw materials or ingredients, and then with making sure you buy enough so that you can fulfill existing demand without having a lot left over.
Say, I’m selling leche flan. Where am I getting milk and eggs? Let’s say I have a “suki” and I am keen to keep our relationship. Fine and well. But what if I can get a better deal for eggs elsewhere? Is it a good idea to buy more eggs for less? Would there be enough demand for my leche flan to require more eggs?
These questions are part of supply chain management – and you have yet to deliver a finished product to your customer. These questions are relevant whether you’re aiming to sell to every part of the Philippines, or are happy to cater to customers in your condominium complex, barangay or municipality. There definitely is value in small businesses learning supply chain concepts even if they’re not looking to appear in every SM mall, for example. Arguably especially so, since a smaller market can easily amplify any “mistakes” your business makes.
A better grasp of supply chain management definitely allows businesses to think big, to go beyond what they thought was possible, to tap into new markets and new niches. But it also allows them to focus with laser-like precision on their existing customers and serve them better. Supply chain also allows them to think small – and sometimes, thinking small can be the best way to go.