Supply chain disruption is arguably a business owner s worst nightmare. It causes shipping delays, ensuring finished goods don’t reach the consumer on schedule.
Yet, this is the situation most businesses are facing in 2022. Due to the COVID-19 pandemic and the Russia-Ukraine conflict, the supply chain is facing the worst disruption in recent memory.
As a small business, you’re probably already feeling the pinch, but it needn’t get more painful. There are steps you can take to overcome your company’s supply chain issue and ensure it operates normally.
Read on for more.
Maintain Adequate Stock
Many businesses run into supply chain shortages simply because they don’t maintain adequate stock at all times. Often, it’s because these businesses can’t afford to keep an inventory reserve.
But to prevent your business from running out of the products it sells, building up enough stock — especially if you’re anticipating prolonged disruption in your supply chain — is key. If you don’t have enough money to purchase stock reserves, you can take out a working capital or warehouse financing loan.
Keep in mind that stocking up doesn’t necessarily mean buying as much stock as can fill up your warehouses. It needs to be stock that can meet your customers’ demand until the supply chain stabilizes again.
Also, consider the nature of your products. If you’re selling perishables, obviously you wouldn’t stock beyond what you can sell before it goes bad.
Diversify Your Supply Chain
How diversified is your supply chain?
Having a sole supplier (or a few) is a great cost management strategy as long as they’re reliable. However, things can start to fall apart when there’s a supply chain disruption.
Let’s say you’re a small glass manufacturing company. You have one foreign raw materials supplier. During the height of the COVID-19 pandemic, port operations saw significant slowdowns. This means your supplier was probably unable to deliver your materials on schedule.
Had you diversified your supply chain and added a local supplier, there’s a good chance your supply of raw materials wouldn’t have been impacted significantly. As such, prioritize supply chain diversification to ensure you have enough options when disruptions hit.
And, diversification shouldn’t happen at the manufacturing stage only. Once your finished goods leave your manufacturing facility, they need proper distribution to retailers or consumers. Ensure you have multiple freight forwarders on your speed dial.
Hire an In-House Supply Chain Specialist
In a recent survey, 57 percent of companies polled said supply chain management makes them more competitive.
Does your small business have a trained supply chain manager? If you’re anything like most small business owners, the answer is no. You’re probably the one in charge of managing supplier relationships.
While we’re not saying you’re not competent enough to handle supply logistics, during times of severe disruption you might be overwhelmed. Plus, you have other important business functions to manage.
Hiring an in-house supply chain manager can help protect your company from supply chain meltdowns. This professional will be responsible for, among other things, forecasting supply chain shortages and implementing appropriate mitigative measures.
If your business cannot afford to hire a supply chain manager at the moment, there’s a cheaper alternative: outsourcing. This involves hiring a third-party company that specializes in managing and optimizing client supply chains.
Bring Manufacturing Home
It’s not uncommon for U.S. companies to manufacture their products in China, Taiwan, and other overseas countries where the cost of labor and materials is low. Overseas manufacturing is a sound strategy, but its soft underbelly can be exposed during a global supply chain disruption.
The COVID-19 pandemic is an apt example of how manufacturing businesses can crumble when global shipping operations come to a standstill. China, a global supply chain leader, is one of the most affected countries by the pandemic, which means U.S. businesses that manufacture in China have had to endure painful supply delays.
Manufacturing in the U.S. can be cost-prohibitive, but in the face of worldwide supply chain disruptions, it’s your best shot at keeping your business alive.
Manage Customer Expectations
Knowing how to solve supply chain issues isn’t just about handling the business side of the equation. The consumer side needs to be attended to as well.
Your customers expect you to have the product in stock at all times. However, they also understand that supply chain issues can cause temporary shortages. Unfortunately, some businesses struggle to use this to their advantage by overselling and making promises they’re unable to keep.
If you’re facing supply shortages but you keep advertising the product, for instance, consumers are naturally going to assume you’re well stocked up. They’ll come to your store or make online orders as usual.
What will happen when they realize you are out of stock? Their confidence and trust in your brand will decline – not because it’s wrong to run out of stock but because you failed to manage their expectations.
Be forthright with your customers. Indicate that a product is out of stock or only limited quantities are available. This way, your customers will know what to expect when they make an order.
Mitigate Your Company’s Supply Chain Issue
Supply chain disruption can kill your business. As a business owner, it’s your responsibility to find ways to overcome your business’s supply chain issue or at least mitigate its effects. Some measures you can take include diversifying your supply chain, stocking up, and hiring a supply chain manager.
Keep tabs on our blog for more insightful articles.
