Using Supply Chains to Grow Your Business

Posted on Nov 20, 2015

From Harvard Business Review
Published November 20, 2015

Until a few years ago Steve Cronce’s Raphael Industries did $1 million dollars a year of specialized industrial painting for customers within driving distance of their plant in Milwaukee, Wisconsin. One of them happened to be GE Healthcare, which sent Raphael “dead” X-Ray tube parts for re-coating and re-commissioning. Challenged by other entrepreneurs in Scale Up Milwaukee’s Scalerator program to come up with a plan for rapidly ramping up his business, Cronce wondered: “What if I redefined Raphael as a strategic link in the global medical imaging supply chain, rather than as a paint shop?” This supply chain epiphany is taking Raphael toward $10 million of work a year by burrowing into GE’s global network as well as serving its competitors. He is poised to become the leader in this segment of a multi-billion dollar market. “By serving as GE’s and other equipment makers’ supply partner, the whole world is now my scope. I am no longer limited by geography.”

This story leads us to a question: Which sounds sexier: sassy Silicon Valley startup or nose-to-the-grindstone supplier? No doubt the tech startup wins the popularity contest hands down.

But let’s change what we’re asking: Which has the better potential to scale up and create long term value for customers, owners, investors, and employees? According to a study by the Center for an Urban Future, small businesses that win large supply contracts report average revenue growth more than 250% in the two years after their first sale. The reality is that the vast majority of successfully scaled ventures are not mythical unicorns with billion dollar paper values, but workhorses that plug along, steadily producing results year after year.

Read the full piece here.