Logistics of a Startup

Logistics of a Startup

Startups often put a great deal of emphasis on engineering, marketing, and sales in the early product development stages. It is no surprise that these three business functions are essential in launching a successful high growth company. Consequently, there are also circumstances where products are an early grand slam and less of a sales effort is required. When this is the case, a well thought out go-to market strategy is critical in capitalizing on every sale opportunity. Even though the sales team is off the hook for now, the organization cannot sit back and expect the product to fly off the shelf. First the product must travel through a network of logistic nodes before it can get into the hands of a consumer. In my experience, logistics of a startup are similar to larger organizations. The difference is at what stage you focus your time.

Conceptually, you may understand that logistics is a business function required to get products from point A to point B. In between these points there is a tremendous amount of white space. It is easy to lose sight of your destination.

Below are 4 areas for startups to focus on to ensure the logistic system will support the company’s go to market strategy:

  1. Product Knowledge:

    Know your products’ shipping dimensions. You are the expert when it comes to your own product, know what you are shipping before you start soliciting help. Key information you should know is: number of units per carton, number of cartons per pallet, carton and pallet weight, carton and pallet dimensions (L x W x H), and Harmonized System (HS) code (if shipping internationally). In order to attain a quote from any logistics provider you will need to have this information on hand.

  2. Distribution Model:

    How your product will get into the hands of a consumer?Work backwards from the consumer to identify key nodes in the logistics network where inventory can be stored, as well as modes of transportation that will be required.

  3. Value Added Services:

    Value added services can cover a large scope of work but the most common are packaging, bundling, kitting and customizing. Current packaging may not be compliant with retailers’ packaging requirements, or perhaps a specific component in your product has multiple options (size, color, ect…) that you want to offer as an upgrade. Knowing you have options in your supply chain to postpone making decisions can save you time and money.

  4. Logistics Costs:

    Focus, focus, focus on costs. I cannot stress this enough. I find it helpful to document a cost for each touch point in your logistics network. This will allow you to control your logistics expenses and eliminate non-value added activities.

-William