Small Business Supply Chain Disruption: How to Survive

Surviving supply chain hurdles video

Supply chain disruption is an unexpected event or series of events interrupting the typical flow and delivery of goods or services.
There are several reasons why interruptions may occur, including but not limited to natural calamities, technological breakdowns, economic decline, political turmoil, and pandemics, such as the COVID-19 outbreak.

The Effects of Supply Chain Disruption on Small Business

Problems in the supply chain can significantly affect small firms, regardless of the underlying cause, due to limited resources and flexibility when unforeseen circumstances arise.

If an organization cannot procure the necessary supplies or raw materials, it can result in many issues, including production delays, declining product quality, and lost sales.

When costs grow, and orders cannot be fulfilled on time, small businesses may also find that customer relationships are in jeopardy.

Companies may continue to encounter challenges even after the emergency has passed due to cash flow issues, the need to locate new suppliers and adapting to varying customer demand levels.

In a recent survey by the U.S. Census Bureau, 38% of small businesses reported experiencing delays in receiving goods from domestic suppliers. Hard hit was Manufacturing (64%), Retail (59.8%), Construction (58.5%), Accommodation and Food Services (51.4%)

Owners of small businesses must recognize that seemingly insignificant difficulties, such as a lack of available truck drivers, can significantly affect their operations. Being unprepared can have devastating consequences, including the closure of a business. If there is one thing we have learned from the recent Coronavirus epidemic, business owners should proactively prepare for the possibility of supply chain interruptions to reduce the harmful effects on their livelihoods.

Causes of Small Business Supply Chain Problems

The Covid-19 Pandemic

The recent Covid-19 crisis brought to light the considerable impact that supply chain problems can have on the owners of businesses. These problems arose from various circumstances, such as limited travel alternatives, closed borders, closed factories, along with manufacturing and freight delivery delays. As a result of the pandemic, thousands of containers were abandoned and heaped outside the ports.

Suppliers in many industries were harmed, and changes in consumer behaviour during the lockdowns made it even more difficult for small enterprises to anticipate demand. This resulted in inventory shortages in some areas and overstocking in others.

Other Supply Problem Causes

Supply chain issues can occur from various factors that vary with the sector of the economy, the geographic location, and the situation’s particulars. However, here are some examples of common circumstances that can cause problems:

  • Natural disasters and extreme weather events can wreak much destruction and chaos. Hurricanes, earthquakes, floods, and wildfires all have the potential to cause damage to vital infrastructure, which in turn can disrupt transportation networks and cause power outages. Industrial facilities, storage facilities, transportation routes, and internet supply can also be impacted, resulting in delays and shortages of supplies.
  • Geopolitical tensions and commercial disputes can potentially disrupt established supply chain operations. Increased costs, trade obstacles, customs clearance delays, and product sourcing can result from political instability, trade wars, tariffs, sanctions, and changes to government rules.
  • Problems with suppliers might include various obstacles, such as insolvency, financial instability, worries about quality control, or an inability to fulfil supply requests. If these problems manifest, reliance on a single supplier or a small group of suppliers might make a company more vulnerable.
  • Transportation obstacles such as congestion in the ports, labor disputes, accidents, or a lack of fuel can potentially cause bottlenecks and delays in the delivery of goods. Restrictions placed on the capacity of shipping, air freight, or trucking companies can also impact delivery timetables.
  • The risks associated with cybersecurity include intrusion into supply chain systems and infrastructure, resulting in data breaches, malfunctions in the systems, and interruptions in business operations. Ransomware attacks and data breaches can result in downtime for operations, compromised data, and delays in the processes involved in supply chain management. These kinds of security concerns call for stringent precautions to protect against the possibility of cyberattacks and to keep the supply chain operating as efficiently as possible.
  • Unpredictable shifts in demand patterns, such as sudden increases or decreases in consumer demand, can potentially stress supply chains. These fluctuations can result in mismatches in inventory, out-of-stock situations, or inventory surpluses.

How to Survive Disruptions in Your Supply Chains

There is a variety of actions smaller entities can take to survive disruptions in the supply chain.

  • Analyze your supply chain and identify any potential dangers to reduce the likelihood of any potential disruptions. By undertaking a careful risk assessment, you can prioritize your efforts and adequately distribute resources following those priorities.
  • Determine any essential suppliers in regions prone to natural disasters and take measures to reduce the risk, such as procuring goods from alternate suppliers or building up a supply in advance.
  • Create a backup plan that explains the actions to take if there are problems with the supply chain. For instance, you could include a standard procedure to communicate with suppliers, customers, and employees during such an event.
  • Find other sources of supply or negotiate new terms for existing contracts. Investing in technological advancement and industrial automation is another way to strengthen resilience. Businesses can monitor their supply chains in real-time and identify problems at an earlier stage if they use technology such as inventory management systems. This information can assist you in taking corrective action before the issue becomes a serious challenge.
  • Cultivating good relationships with suppliers is essential to guarantee a trustworthy supply chain. Involve them in developing backup plans and determining how to incorporate redundancies into the system. Suppose you want to ensure that essential supplies are still accessible despite an unforeseen disruption. In that case, you should either consider purchasing them from different suppliers or keep a safety stock on hand.
  • Business owners must educate themselves on the most recent supply chain concerns to stay ahead of the game. Organizations can maintain their agility and respond quickly to issues if they remain informed of the latest industry news and keep track of any developing dangers. Being proactive in this way is beneficial to companies, as it helps them maintain their competitive edge and ensures the continuation of their commercial success.

Examples of businesses that have successfully navigated supply chain issues

There are many examples of businesses that have successfully navigated supply chain challenges. Here are a few:

  • Backyard Bev Co. – The Backyard Bev Company sells soda syrups that are all-natural and artisanal. When the virus struck, the company encountered problems with its supply chain. They responded by focusing on online commerce and offering kerbside pickup, which assisted them in maintaining revenue and keeping their business afloat.
  • Boll and Branch – When their overseas factories could not continue supplying customized items during Covid, Boll and Branch, a luxury bedding company based in Jersey, continued production by collaborating with smaller domestic manufacturers to fulfil its customers’ needs.
  • Masienda is a family-owned and operated business in California that specializes in importing and distributing high-quality Mexican corn to restaurants and home chefs throughout the United States. As a result of the havoc wreaked by Covid on international shipping and transportation, Masienda swiftly adjusted its business model to collaborate with a variety of small, independent trucking businesses to keep their products flowing.
  • The Melvin Brewing Company, located in Wyoming, had a disturbance in its supply chain when one of its primary ingredient suppliers went out of business. Melvin Brewing decided not to halt production and instead collaborated with a local maltster to design a new malt mix that could serve as a suitable replacement for the problematic ingredient.
  • The Roasterie: This coffee roaster based in Kansas City ran into supply problems after a severe drought in Brazil drove up coffee prices. The Roasterie could keep its business afloat by diversifying its supply chain. They accomplished this by obtaining new coffee from various geographic locations and implementing new technology that improved the company’s overall efficiency.

Summary

In summary, disruptions in the supply chain present a problem for all types of enterprises. However, taking a proactive stance can assist businesses in overcoming the difficulties they face and ensuring their continued success.

Developing solid partnerships with suppliers, diversifying sources, keeping communication lines open, and investing in innovative technological solutions are essential. These measures lessen the impact on businesses and make them more resilient.

Take action now to ensure your business is prepared for everything that may come your way.

 


This completes our series on current issues affecting small businesses. Other articles in this series include:
The Small Business Labor Shortage: Where, Why, and How to Survive
How to Survive Inflation as a Small Business Owner
9 Essential Cyber Security Tips for Protecting Your Small Business  
Navigating Economic Uncertainty: 7 Strategies for Self-Employed Small Business Owners
Issues Affecting Small Business: Compliance with Government Regulations

Data443 Privacy Safe Privacy Management Service by Data443
WPO Image