Everything from raw materials to finished goods and equipment that your franchise business needs to run smoothly is part of the supply chain. Tomatoes for salads, janitorial supplies, tutoring intake papers, or clothing for your eldercare staff are examples of these items.
Your business must have a well-oiled franchise supply chain to ensure that it receives quality products on time and at the right price. It’s important to get fresh tomatoes to the franchisee every day and tomatoes of the high quality your customers expect. Make sure you know how to return products that aren’t what you ordered—mistakes are bound to happen.
It’s not enough to deliver the goods to the right address; it’s also necessary to ensure that the truck arrives on time. Franchisees must have a strategy in place for receiving, packaging, and storing merchandise and the human resources to execute that strategy. While the lowest possible price for the franchisee may be an excellent price, the franchisor will also desire a price that benefits the supplier and the franchisee. This is called a sustainable price.
Make sure you have a wide range of options. In many cases, franchisees must purchase goods and services from the franchisor’s approved suppliers or directly. There are advantages in scale that allow franchisors to offer lower prices than independent businesses because they benefit from economies of scale. However, if a franchisee prefers local suppliers or thinks they can get a better deal on their own, it can be frustrating.
When the time is right, the franchisee has all the materials, fresh food, and inventory to make a profit. However, both the franchisee and the franchisor must be careful not to overcommit stock. It’s a waste of money to keep extra meals and uniforms on hand when you don’t have enough people to wear them.
In contrast, customers may be annoyed by out-of-stock products or materials, resulting in a loss of sales and long-term customers. Additionally, the right time may be dependent on a delivery schedule. You may have to work around the schedules of other franchisees to get smaller deliveries at your desired price if you order in small amounts.
Many franchisees focus solely on delivering goods to the franchise’s door, which is a critical component of the supply chain. In addition to understanding payment terms, delivery schedules, and return policies, keeping an adequate stock of goods on hand is essential.
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