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When the pandemic shut down normal life in March 2020, the small business supply chain was not ready for the flood of online orders that followed. Things have been disrupted ever since, with new events such as the Russia-Ukraine conflict continuing to impact the global supply chain. As a small business owner, it’s already hard to stay competitive and turn a profit. Keep reading to learn how your small business can stay nimble and navigate the ups and downs of the supply chain.
Issues with the global supply chain started during the pandemic. Confined to their homes, people ordered a record number of products online. However, raw-material shortages, factory closures, truck driver shortages, port congestion, and high demand for ocean and air shipping made it difficult for retailers to keep up with consumer demand. There were shortages of everything from cat food to couches.
Last year, Russia’s invasion of Ukraine, further exacerbated supply chain shortages and contributed to global inflation. China renewed lockdowns as part of their “Covid Zero” policy and then reversed course, leading to rising case counts. Labor shortages are also a continuing challenge–there are currently over 10 million job openings in the U.S., but only 5.7 million unemployed workers.
Businesses compete for customers on three primary factors: time, price, and quality. Even before supply chain issues started, small businesses were having trouble competing with giants like Amazon and Walmart. Now shipping is taking even longer, prices have gone up on raw materials and services, and even quality may be compromised.
Supply chain pressures affect a business’s ability to win customers, as well as its bottom line such as profit margin, inventory expense, cash management, and missed opportunities.
Now that you know how the supply chain issues started and why it matters, let’s look at what your business can do to better navigate these issues for the foreseeable future.
Relying on only one vendor is no longer sustainable. In fact, it can present a major supply chain challenge. Diversifying your vendor pool and having back-ups will help you stay nimble when navigating supply chain disruptions. For example, you could have a primary vendor for certain products and materials, and a backup vendor to handle your needs in the event that your primary supplier is unable to help.
Additionally, it’s helpful to maintain frequent communication with your vendors so that you can be aware of any problems or product updates as soon as they arise. Find ways to network with potential new vendors to find ones that are right for your organization.
If you already use a Customer Relationship Management (CRM) software, it can help you manage all your business relationships, not just sales. This includes your vendors and suppliers.
If your business sells inventory, or needs certain supplies to operate, assess what you have on hand. Do you have enough to get through the next four months? If not you may want to stockpile extra inventory and supplies, especially when pricing or availability are favorable. Even if prices are high, if you really need to order more, the stability of your business may be worth it.
The best way to help your customers understand how the supply chain has impacted your business is by openly communicating with them and maintaining transparency. For example, if shipping is taking longer than usual, post a notification on your website that people will see before they place an order. If your restaurant is short-staffed, write a message requesting patience on a sandwich board sign out front. Social media is also a great option for posting real-time updates and notices.
Letting people know about issues in advance will prevent unpleasant surprises and complaints later on. In general, transparency is a good way to foster positive relationships with your customers and build trust. Most people take pride in their community and want to support the local small businesses that add vibrancy. If you ask for their patience, they are often happy to give it.
If you’re concerned about the supply chain negatively impacting your business, running an audit is a good way to identify weaknesses so you can address them before they hurt your business. Involve professionals from different departments such as sales, product design, and IT in this audit. You can use their expertise and insight to develop solutions for preemptively handling potential supply chain issues.
Remember that technology is your friend when it comes to dealing with supply chain issues. Utilize software that will help you improve efficiencies, manage relationships with your suppliers, and forecast inventory needs.
Whatever is going on with the supply chain, your employees are still your most valuable resource for serving customers and keeping your business running smoothly. Since labor shortages and competition have also been a challenge for small businesses, do what you can to boost morale. You may not be able to offer the same wages or benefits as a larger competitor, but you could buy lunch for your employees once a week. Recognizing people’s efforts and achievements is always helpful, too.
Unfortunately, no one can predict when the supply chain will return to its pre-pandemic functioning. Businesses can prepare for continued disruptions by developing a long-term business plan. While the supply chain will likely return to normal over time, having a plan in place to weather the storm can be a good way to protect your business. Are there any old strategies that you need to cut? Are there new strategies that you can incorporate into your business? How does the supply chain impact your goals for the coming year? Ask yourself these questions and use this information to develop a long-term plan.
Choose the best business bank in Florida for a steady partner through uncertain times. Cogent Bank offers customized business banking solutions to help you weather a disrupted supply chain and other challenges. To get started toward your long-term goals for growth and expansion, connect with a Cogent associate to discuss your business needs and the commercial banking, lending, and treasury management services that could help move you forward.