Inclusive supply chain for startup companies. Integrating suppliers as strategic partners.

Successfully launching a new product on the market involves setting up of an efficient supply chain. For startup companies, which mainly focus inward on technology and product innovation, sourcing components and managing suppliers can become a challenging task, which is often poorly addressed or addressed too late. For suppliers, new companies, initially, represent low volumes and complex requirements as well as a higher probability that startups might fall short of a supplier’s priority list. Nonetheless, the success of a product comes as much from its innovative dimension as from its efficient supply chain.

Rightly identifying and involving key suppliers early on in the life of a company, and in strategic decisions, offer several advantages, thereby, making the venture phase a winning one: close cooperation enables to rapidly improve the manufacturing processes, harness the technical capabilities to offer a high degree of product customization, enable co-creation, and the identification of better solutions fed by trust and loyalty. Similar to Japanese keiretsu systems, with their profound buyer-supplier links, an exchange based relation allows suppliers to become deeply ingrained in the ecosystem of the venture. Partnering suppliers gain insight into the needs and expenses of buyers. Proactive partnering suppliers might also help reduce the cost of manufacturing the product. Frequent exchanges of ideas regarding technology lead to quick innovation cycles, which in turn motivate suppliers to provide exceptional levels of quality with strong involvement.

To reach such an integration level, the management of a startup company needs to identify very early on – even before the inception of a company – the suppliers they would like to partner with. The management also needs to transmit the passion of the challenge, the product, and technology. Only then can both partners foresee the mutual benefits of working as strategic partners and define the terms of the collaboration.

As part of the strategic review and support carried out for clients, ValleyRoad Capital addresses this dimension of the value chain.