Supply chain issues continue to haunt small business owners well into 2022. These issues materialized during the onset of the pandemic and were further exacerbated by the recent war in Ukraine. While it may seem that only larger companies are affected, supply chain disruptions impact small businesses just as much. In a recent survey, up to 43% of Canadian small businesses say the impact has been severe and is impeding their ability to grow as the economy tries to recover. But are small businesses doomed? No – not at all. With the economy trying to reach a state of normalcy, small businesses are developing strategies to shape more resilient supply chains. In this blog, you’ll learn about how we got here in the first place, and strategies to help protect your small business from supply chain disruptions.
How did we get Here?
Many supply chain issues that were brought on by the global health crisis are still lingering, including work shortages, shipping delays, manufacturing components, and spikes in transportation costs and consumer prices. These issues can all be explained by a basic economic theory; commonly known as supply and demand. Supply decreased when unemployment was high during the pandemic, leading to labor shortages and reduced production across the board. As for demand, stimulus packages arrived, and Canadians were forced to stay home. Houses retained or even increased their purchasing power, which led to increased spending on consumer goods online. Sectors such as semi-conductors faced increased demand but failed to adequately supply. As a result, prices soared and caused record-high inflation, bringing us to where we are today. Adding unwanted pressure to supply chains is the Russian invasion of Ukraine and its economic sanctions, impacting agricultural commodities and energy products.
Strategies for Resilient Supply Chains
Supply chain disruptions aren’t uncommon and small business owners have most likely already been in a similar situation before. It’s part of doing business, and companies that can innovate and adapt will be the ones who survive.
Now that you have a deep understanding of how supply chain disruptions all came to be, let’s discuss strategies to withstand current conditions and future disruptions.
1. Managing Your Inventory
When your inventory is properly organized and accounted for, your supply-chain management falls into place. It may seem obvious but increasing your inventory to higher levels than you normally would, is one of the most effective strategies in combatting supply chain issues. This may not be available to you now, since the situation is very much ongoing. However, if the opportunity presents itself, it can be a great way to prepare for future disruptions, especially on your best-selling products.
Alternatively, if your supply chain and inventory is too cumbersome to manage by yourself or none of your colleagues have experience in managing inventory, you may want to consider investing in a supply chain management tool. While supply chain tools are mostly used by larger businesses, SMBs can benefit from them as well, especially when supply chain issues are present. They can help you in many ways, such as tracking your inventory, managing shipping and delivery, reacting to demand fluctuations, optimizing inventory costs, and keeping you informed of any changes that require your attention. In addition, supply chain tools can adopt inventory-control techniques such as ‘’Just-in-time inventory management’’ and ‘’safety stock inventory’’, which prove to be useful techniques for times like now.
Automating your supply chain may be costly at first but will allow you to focus on the more important aspects of running your small business. There are plenty of software solutions that cater to small businesses like yours. For a detailed list of available tools and software available for small businesses in Canada, click here.
2. Practice Transparency With Customers
More and more, customers value transparency and are looking for cues as to how trust worthy your business is. According to a study by Edelman, 81% of customers said they need to trust a brand in order to buy from them. By integrating transparency into your customer service, you will be in a better position to retain your customers amidst supply chain disruptions. As much as supply chain disruptions can be a pain for your business, your customers suffer just as much. Make sure to inform customers once they place an order that it may be delayed and keep them updated on any progress. By being on top of your customer service game, you will be able to manage your customers’ expectations and assure them you’re doing everything you can to meet their needs.
3. Reevaluate Your Suppliers
Just like your small business, suppliers are struggling to manage the impacts of supply chain disruptions and to meet customer expectations. If some of your suppliers aren’t performing as expected, it may be time to reevaluate your relationship with them or to explore alternatives. Suppliers are used to dealing with uncertainty and strike up new deals all the time, so don’t shy away from negotiating new contracts and terms with your current suppliers. Building a resilient supply chain also means diversifying your suppliers and keeping things close to home to minimize delivery and shipping delays. If you’re open to establishing new relationships, make your goals clear from the beginning, and look for stable and reliable suppliers who can adhere to performance targets. By negotiating contracts and establishing new alliances with key and trust worthy suppliers, you will build a supply chain that can react accordingly to disruptions.
What the Future Holds
One thing is for certain, supply chain disruptions won’t disappear anytime soon and may still linger for the better part of 2022 and even further into 2023. You still have issues like political instability, inflation, and talks of a recession on the horizon causing uncertainties. Thus, small businesses need to devise sophisticated action plans to help protect their business from ongoing supply chain disruptions and future outcomes. This means having a thorough understanding of your inventory, investing in supply chain management tools to improve efficiency, knocking your customer service out of the park and reevaluating your suppliers.