Family Business- Supply Chain Synergy
In a family business can members be part of a supply chain but run independent businesses? How effective will this network be? Will this improve successes of startup businesses? Can individual ambitions affect relationship?
We know of Mom & Pop Stores, of businesses run by one generation and then being taken over by the next etc. Can siblings run their business together or be part of a network in the business value chain?
This is the true life story of Robin and his two sisters in business and how they built synergy in their supply chain.
Supply chain is also called value chain and the value created remains within the family. Value is the selling price minus costs.
Family Business-Synergy in Supply Chain-A True Life Story
This is the true life story of Robin and his two sisters in business and how they built synergy in their supply chain.
Supply chain is also called value chain and the value created remains within the family. Value is the selling price minus costs.
Family Business- Quote
“ In most cases, family business are stronger because of the complementary skills of their family members.”-Bernard Kilska
Furnishing Cloth- Quilts- Quilt Handbag
Robin started a furnishing cloth business a decade ago and he owns two stores.His sister Laila wanted to setup a quilt making unit in her house. Who else she will turn to for advice? Naturally, her brother He offered his sister cloth at wholesale prices and display units in his stores, for selling the quilts.
What are the benefits of Synergy ?
1. Robin’s requirement of cloth has increased and therefore he can bargain for a better price from his suppliers.
2.Laila can follow just in time* concept for her key raw material and avoids the supply side risk.
3.Laila’s distribution cost will come down because she need not set up a retail outlet in the initial stages of her business.
4.Laila gets customer data base from Robin.
5. The cost savings made Laila’s quilt prices very competitive in the market
Growth of Quilt Business: Smart Sales Strategy
Laila’s business started growing and she also sold online.
She set up display units in maternity homes, pediatric hospitals etc where she can target her potential customers.. She understood the right fishing holes for lead generation.
We talk about selling ice to Eskimos but Laila sold the quilts in a city where the three seasons of weather is best described as-hot, hotter and hottest. Her clients are the ones who use air conditioners in their houses.
Family DNA
The youngest sibling Diana too wanted to jump in. She got the idea when Laila mentioned the problems she faced in disposing of the cloth waste/ cuttings generated in her quilt manufacturing.
Diana started making quilted handbags and she got the leftovers from her sister, practically at no cost.
Robin, too, pitched in to supply the left over cut pieces as also seconds/ rejects. Now Diana has the cost advantage along with adequate supply. He also kept a few pieces of handbags in the shop as his main customers were women.
Diana, you can say, is the luckiest of all the three
Synergy of Product Family
Women are the main customers for furnishing, quilts and handbags. The customers of one business could be customers of the other two. The family’s presence in all three businesses is a key factor for success and generating higher value in totality which would not have been possible had they been run by unrelated individuals.
Nuggets
