4 Major Mistakes Niche Businesses Make With Their Supply Chain Relationships

Running a niche business poses a number of unique challenges because they are different in almost every single way. When we are running something different we need to capitalise on our relationships, especially when it comes to the supply chain. Therefore, any business starting out that’s operating within a very niche sector needs to recognise the importance of relationships, especially in the supply chain. This is why it’s worth taking note of some of the key mistakes niche businesses make in their supply chain relationships:

Working With Fewer Suppliers

In niche markets, there are often a limited number of suppliers capable of providing specialised, high-quality components. A manufacturer of cell tabs or the cathodes in a battery can use very specific suppliers. Therefore, if we rely on just one or two suppliers, this can leave niche businesses vulnerable to disruptions if those suppliers fail to deliver. We should diversify our supply base, but also we need to remember that working with the right suppliers can make a big difference in our business, while also ensuring that we can give them what they need. It’s always a two-way street.

Failing to Manage Customer Expectations

Niche market customers often have very specific and demanding expectations around service levels, customisation options, and features of the product. Therefore, businesses that don’t clearly communicate what they cannot deliver set themselves up for unhappy customers, but more importantly, strained supplier relationships. When we manage customer expectations and give them what they demand while also keeping it within a specific remit, ensures that when problems do occur, we’re able to have a far more effective supply chain relationship.

Not Sharing Information Effectively

Communication is one of the biggest problems businesses can have, and niche businesses should have robust systems in place to share data. This can include supplier data, facility information, as well as performance data. A lack of visibility into supplier operations can make it difficult to make informed decisions and therefore ensure a smoother flow of materials. Communication is always crucial, and therefore when we invest in information systems, we are going to make a far better impact on our relationships with suppliers, but also learn how to prioritise our communication.

Ignoring Complexity and Its Impacts

As niche businesses grow, their product portfolio tends to expand with a wider variety and offerings of lower volume. While this can result in profits and satisfy customer demand, this can add greater complexity to the supply chain. Therefore, we need to analyse the true profitability of the mix of products we offer and be willing to get rid of the low-performing ones.

Working in the supply chain is always tough for any business. When you are a niche company, the key is about proactively managing the unique challenges within the supply chains, and this can mean a number of different components, including setting realistic expectations, but also respecting the creativity and artistry that comes with a niche practice. Niche businesses that treat suppliers like cogs in a machine can risk losing the qualities that make their products special. Working to minimise these mistakes can ensure a far better supply chain relationship and a better product.