Enhance ReadabilityA few years ago, an investor declined to invest in my startup unless I spent a month in Ghana where we source our main ingredient, moringa. Her insistence sounded crazy at the time. I was the only person working full-time on Kuli Kuli, creating moringa superfood products. I wasn’t taking a salary and was strapped for both cash and time. The idea of investing the few dollars we had on an extensive trip to meet with our Ghanian moringa suppliers, while ignoring all of the urgent sales opportunities in the US, seemed foolhardy.
Companies live or die on the strength of their supply chains. Tweet This Quote
Three years later, I understand her logic. Companies live or die on the strength of their supply chains. Too many founders fall into the trap I fell into of thinking only about their customers and not about the suppliers that make their business possible. Now, Kuli Kuli has a policy of aiming to visit our suppliers once a year to continue to build the relationship.
I’ve been thinking a lot about relationships recently, as I’m currently in the process of planning my wedding. It’s often struck me that the books I’m reading about marriage are quite similar to the articles I’ve been reading about supply chain management. On two separate occasions, I’ve had suppliers tell me they feel like we’re progressing in the dating stage and are getting closer to a “marriage” of our businesses. Here are fives tips I’ve found most helpful in building long-lasting supply chain “marriages”:
1. Honest and frequent communication
Just as most people wouldn’t enter into a long-distance relationship without knowing the person first, it’s critical to meet your supplier partners in person as much as you can. In between these in-person meetings, make sure you’re in regular contact via phone/Skype calls. At Kuli Kuli, we also make our suppliers feel included in our “big wins” by letting them know when we land major new retail accounts or get featured in prominent media outlets.
Too many founders only think about their customers and not about the suppliers that make their business possible. Tweet This Quote
2. Showcase the bigger picture
We make sure all of our suppliers, from our cherry farmers to our printers and freight carriers, get a chance to try the final product and hear the story behind our business. Letting your suppliers try the product they helped to produce might sound obvious. However, the majority of cocoa farmers I’ve met have never tried chocolate because the companies sourcing from them never thought to send them any of the final product.
3. Trust
You can sign all the NDAs, MOUs and other legal documentation you want, but at the end of the day, if you don’t trust your suppliers and they don’t trust you, you won’t get very far. The legal documentation is only as good as your ability to enforce it. Particularly at the startup stage, your ability to fight potentially long legal battles is low, so do everything you can to avoid them.
You can sign all the legal documents you want, but if you and your suppliers don’t trust each other, you won’t get very far. Tweet This Quote
4. Make it a win-win
The best partnerships (and marriages) in the world are those where both partners feel like their needs are being met. Meeting a supplier’s needs doesn’t always mean paying them the highest price. Collaboratively determining the price goes a long way towards making sure both sides are happy. Particularly when you’re working with smallholder farmers, it’s important to keep in mind cash flow constraints. Few smallholder farmers have the cash to purchase the agricultural inputs necessary for a successful harvest. Thus, paying part or all of the purchase order upfront means a lot when building the relationship.
Make sure all of your suppliers get a chance to experience your final product and hear the story behind your business. Tweet This Quote
5. Leverage your resources
Take a moment to step back and think about what your organization does well and where your skill-sets could be of use to your suppliers. For example, no one at Kuli Kuli is a scientist, but we have an advisor who is the leading expert on moringa in the world. When one of our suppliers needed help getting their moringa processing up to our standards, we were able to bring in our advisor for advice.
Having a strong, ethical supply chain is a must for enterprises that truly want to have a positive impact. Tweet This Quote
There are many different definitions for “social enterprise.” The one that resonates most with me is a business that when you take away their impact, the business ceases to exist. This isn’t to say that one-for-one models don’t have a place, but there is something profoundly different about businesses that have impact built into their DNA, not their CSR. Often, that impact comes from the people and places where the business makes their product. Having a strong, ethical supply chain isn’t just a good-to-have, it’s a must-have for enterprises that truly want to fulfill the “social” aspect of their enterprise.
