Insights into the world of small business lending and development
Business Resiliency 101: Managing supply chain disruptions for small businesses
This is the fourth post in a series on the basics of building a more resilient business to help you navigate unforeseen challenges. Check out our post on marketing your small business in a post-covid landscape, building your online presence and protecting your small business from cyberattacks. Stay tuned for future posts in this series!
Small businesses are experiencing disruptions to their supply chain caused by the COVID-19 pandemic. Such disruptions affect small business owners in different ways, resulting in reduced revenues, inflated costs, delayed production and delivery of products, which ultimately affects their ability to serve customers and make profits.
We’ve compiled a list of strategies for entrepreneurs to help mitigate and manage supply chain disruptions in their businesses.
Communicate with existing suppliers
Talk with your existing suppliers to understand what the delays will be, what kind of options you have as a business owner, and when you should expect to receive inventory. Leveraging your relationships with suppliers will allow you to better prepare and strategize in case something goes wrong.
Once you have a clear sense of your suppliers’ inventory levels and purchase fulfillment status, you’ll have an idea of whether they’ll be able to handle your current and/or future orders. This will also help you understand if you need to find additional suppliers in the meantime, re-think your product lines, or incentivize you to partner with another small business or retailer while operations go back to normal.
Avoid relying on one single supplier or vendor, and identify backup suppliers and vendors prior to experiencing any supply chain disruptions. For example, your supplier has told you that there might be some delays on your next order, or perhaps the supplier is no longer able to fulfill your order at all. Now what?
Seek out your backup suppliers and vendors, some of whom might jump at the chance to work with your business. And of course, be open to exploring and using different products and services in your small business.
Digitize your supply chain
In a digital world, small businesses need to implement digital tools to track, assess, and manage supply chain processes. Tracking suppliers and vendors manually is less efficient, which is why creating spreadsheets or implementing supply chain management tools in your business will allow you to track historical information and let you plan for the future. Digitizing your supply chain will help you manage your supply chain more effectively and save your business time and money.
Get in touch with your customers
A supply chain disruption in 2021 is inevitable at this point, which is why it’s important to communicate with your existing and prospective customers about changes in your business as it relates to the supply chain. Be transparent with your customers and let them know about potential delays and disruptions, and set clear expectations. They will appreciate your honesty, which might help you establish a stronger relationship and ensure repeat business with you. Consider whether offering compensation and/or freebies is appropriate.
Take advantage of gaps in the supply chain
E-commerce giants like Amazon and other major retailers are also experiencing shipping delays and supply chain disruptions, which opens an opportunity for smaller businesses that can fulfill orders more quickly and effectively. If you own a manufacturing business, take this opportunity to reach and engage customers and set yourself apart from the competition.