According to weekly heart rate data collected by (*7*)U.S. Census Bureau Small Business Pulse Surveyat the end of November, delays among domestic suppliers were reported by 46% of small businesses, in comparison with 27% reported a 12 months ago. Moreover, the number of individuals reporting the challenge of finding alternative domestic suppliers greater than doubled from 11% to 23%. No matter where your enterprise is positioned, it’s price following the following pointers to assist manage supply chain disruptions.
So how did we get here?
To answer this query, we must first ask ourselves: “What do the freeze in Texas last February, an active hurricane season along the Gulf Coast, and the warming trend in Canada over the past decade have in common?” They all contribute to the collapse of the supply chain. These natural disasters had a direct impact on the production of plastics and resins used in healthcare (visors and sharps containers), manufacturing (especially automotive and technology), and construction (especially PVC).
Heat and drought in Canada have had a significant impact on the shipping industry. Pallets, the base on which most loads are transported, are most frequently product of pine wood. Warming temperatures in Canada have weakened pine trees, making them more vulnerable to beetle attacks. These same beetles are benefiting from the warming trend, breeding rapidly as a result of the lack of freezing temperatures, which normally kills them. The result was an almost 50% reduction in pine trees over the last decade. An alternative may, in fact, be plastic pallets, which brings us full circle to the plastic shortage discussed above.
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As a result, vulnerabilities in supply chain security have increasingly turn out to be apparent Covid-19 pandemic also. Plant outbreaks caused shutdowns, and those who remained open needed to grapple with producing goods while maintaining social distancing. Labor shortages resulted from the closure of faculties and kindergartens, which caused parents to remain at home or risk infecting an elderly grandparent. Almost every small business owner has been forced to query their sustainability and future resilience.
So how can we bypass disruption and mitigate risk?
Fortunately, there are steps you’ll be able to take – some immediate, some more long-term – to assist mitigate the direct and indirect impacts on your organization. Check out our seven top recommendations:
Find suppliers near you.
Reduce your dependence on foreign markets and delayed deliveries by sourcing suppliers nearby. This way you’ll find a way to administer your free days by shopping less. Another advantage is that smaller, local suppliers could also be more willing to barter longer terms if you are a big fish in their pond.
Reduce dependence on single suppliers.
Any parts sourced from single suppliers will expose you to the problems they have. Have you assessed the risks your suppliers face and whether this can impact their ability to reply in a timely manner? What about your supplier’s suppliers? Consider building relationships with alternative suppliers who could also be available when needed, potentially at more competitive prices.
Plan for increased shipping costs.
Freight and logistics prices have skyrocketed. Assuming you’ll be able to work with suppliers to source materials, giving them time to provide your product on time is one other matter entirely. Small businesses don’t have enough leverage to get ahead in supply chain competition and are consistently pushed to the back burner. While large-scale retailers can rent entire ships, most small businesses cannot do so. However, they’ll and will have to purchase in larger quantities than ever before and plan to pay expedited shipping fees.
Work together to barter additional space.
Those lucky enough to have stockpiled supplies will need to seek out a place to store them. Competition for warehouse space is fierce, especially when your organization may only need it in the short term. Consider partnering with other small businesses to share space to rent to compete with corporations trying to take up more square feet.
Invest in material requirements planning (MRP).
If you have seen significant growth over the last few years, probabilities are your current system has outgrown it and it could be time to look at implementing software you have been avoiding. Having the tools to work with customers to plan for demand is key to making sure the right “safety stock numbers” to optimize inventory. This provides you with a higher probability of getting the materials you would like.
Collaborate with community resources and local worker management.
The labor element of the supply chain is often ignored. According to the previously mentioned U.S. Census Bureau study, by far the best need over the next six months will probably be identifying and hiring recent employees. This problem was indicated by over 41% of respondents. Fortunately, there are many great programs that will help with this. First, look at local training programs at local colleges and veterans’ organizations. Most of them will probably be greater than completely satisfied to work with you – they train them, you hire them. Additionally, many states have regional workforce development boards that may provide help to find these training programs and future employees.
Use your size to your advantage – stay agile.
While some of the recommendations presented here could seem more appropriate for larger corporations, they often struggle to administer money flow as a result of the sheer volume of every day transactions and the bureaucracy associated with management levels. Strategic mid-market corporations will model the cause and effect of potential changes and then be agile enough to implement them at a moment’s notice and benefit from emerging opportunities.
Even though you might feel at the mercy of what is going on around you, always remember the famous quote from anthropologist Margaret Mead: “Never doubt that a small group of thoughtful, committed residents can change the world: in fact, it is the only thing that can ever has.” Take control of what you’ll be able to, plan the rest. You’ve got this!