The Supply Chain of a Franchise – Managing the Challenge

Supply Chain of a Franchise

It’s one thing having to manage a single supply chain involving a single store but managing a successful and efficient supply chain across a franchise is a completely different challenge.

As a franchisor, you will be tasked with obtaining suppliers, communicating with franchisees and suppliers on a regular basis, establishing efficient communication between outlets and your providers, as well as devising comprehensive strategies and game plans your franchisees can follow and introduce across their local management systems.

Needless to say, managing a franchise’s supply chain is not an easy task, but that doesn’t mean that there aren’t several time-tested solutions that will help you minimize costs and maintain stellar productivity and efficiency. With that in mind, here’s what you need to do.

Choose your suppliers carefully

The first step towards successful logistics management is weeding out the bad suppliers from the bunch. It might seem like a no-brainer at first, but it’s important to keep in mind that the process is more nuanced than you might think and that picking the wrong suppliers can literally ruin your franchise.

In the competitive business world, suppliers are numerous, yet there is only a handful that will be able to satisfy the needs of a growing franchise.

You will need to make your expectations and requirements clear to potential providers from the get-go, in order to gather the best offers and, of course, individual guarantees that your demands will be met. Most importantly, you should think of the future.

Your supplier(s) needs to be able to scale with your operation and maintain a level of service regardless of how many outlets you have or manage to obtain in the future.

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Establish multiple suppliers per product and location

No matter how reliable the supplier is, and no matter how beneficial your relationship might be, having only one supplier for a specific product line is not a good business solution.

There is no telling what might happen during the production or delivery processes, and you could be looking at a franchise-wide loss in revenue and brand reputation should they come to a halt at any point.

Given the fact that franchises have a deep impact on the local business landscape, you need to make sure that the supply chain cannot be broken.

With that in mind, it’s important that you obtain numerous providers for every product type, and even according to the supply and demand in every local marketplace. This will allow for the products to reach every outlet more efficiently, and thus keep every local franchise operating nominally. Focus on the following:

  • Research the unique demands and socio-economic drivers of every market you operate in. This will allow you to figure out which outlets require a local supplier, and which can benefit from a mutual provider.
  • Scout the local market for reputable suppliers. Narrow down your search to three top picks for every location, and then proceed to pitch your offer.
  • Determine the true capabilities of every provider and whether or not they are able to meet your franchisee’s current needs.
  • Finally, determine if the supplier is capable to scale their operation to meet the needs of a growing franchise and the outlets it serves. Remember, the goal is to expand the franchise and build local outlets, so make sure the supplier can provide you with the long-term support you need.
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Constant and timely communication wins the day

A franchise is living, breathing entity comprised of numerous parts that are equally important to its survival, and understanding the roles of franchisee vs franchisor is of utmost importance. The franchisee cannot survive without the franchisor’s help and guidance, nor can the franchisor survive without its franchisees.

With that in mind, a hallmark of a promising franchise opportunity for everyone looking to get in the game is a rock-solid supply chain provided by the franchisor. Only by having a strong supply chain can this entity thrive and grow in the future, and continuous communication might very well be one of the best business ideas to achieving long-term success.

In a franchise, communication is not a two-way street, it’s more like a well-functioning junction. Every actor needs to communicate with other actors regularly and convey their demands efficiently and effectively in order to maintain a productive supply chain.

As a franchisor, it will be up to you to mediate and manage these communication paths from the top, but that doesn’t mean that your franchisees shouldn’t be in constant communication with your suppliers as well as your management teams.

Focus on building mutual trust

In the franchising world, building a trustworthy relationship with your suppliers can mean all the difference. Because you’re running a multi-store venture and managing numerous variables at the same time, there is no telling what might happen at any location, at any given moment.

Something might slip through the cracks and all of a sudden one of your franchisees is in need of a quick shipment of materials that should preferably arrive before the end of the workday.

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This is a tough spot to be in, and it can hurt your business if the problem is not resolved quickly. That said, if you have established a trustworthy relationship with your suppliers, you can count on them to get you out of a jam at a moment’s notice, at no extra cost to your franchise. These kinds of relationships will keep your supply chain running smoothly.

Always negotiate pricing with your suppliers

Trust in the business world opens numerous doors for growth and long-term success for everyone involved. With that in mind, it’s always a good idea to negotiate better terms for your company by offering ongoing and constant business to your suppliers in return.

A supplier who knows what to expect in the months and even years to come will be more prone to lower their prices in exchange for continuous cooperation, and of course, steady growth alongside your franchise.

Always remind them that their growth will depend on your success and that lowering their prices would be a sound long-term investment.

Supply chain management is a cumbersome task in any industry, but the challenge becomes even more difficult when you have to build a supply chain for a franchise. Let these tips shape your logistics strategy and help you and your franchisees pave the road to a successful future in the industry.

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