The global supply chain has been unstable this year. As much as I’d like to say otherwise, that instability will continue in the months to come. Ripple effects from the pandemic have created materials shortages, price spikes, and labor crunches across almost every industry. As a result, goods as wide-ranging as tapioca pearls, microchips, and lumber have been harder to come by.
Small businesses are feeling the brunt of these supply chain snafus. Fewer resources and less negotiating power than their larger counterparts means small businesses sometimes have no choice but to pay $185 for a $40 box of gloves. With COVID-19 still disrupting production and shipping operations, we will likely need to deal with supply chain problems through the end of this year.
How can small businesses prepare for the rest of the year with supply chain instability in mind? Let’s run down five steps you can take right now to navigate whatever’s to come in the months ahead.
1. Take stock of existing inventory and supplies
Start by assessing what you already have. What can you do with what’s on hand? What do you need to get through the next four months, including any expected holiday demand surges? Depending on your industry, you may be able to stockpile extra supplies when pricing and/or availability is favorable. Even if prices are high, securing ample supplies ahead of time can bring invaluable stability to your business. Pivoting some of your offerings to take advantage of readily available supplies may be worth exploring, as well, if the nature of your business allows for it.
2. Make a plan for backup suppliers
Back in April, a shortage of tapioca pearls sent boba tea shops in San Francisco scrambling to find new suppliers. The crunch drove prices of boba drinks up while causing all kinds of stress for tea shop proprietors. One silver lining emerged, however: a Bay Area boba factory started getting inquiries from international tapioca suppliers they previously didn’t know about.
Learn from the boba shortage and source backup suppliers now. It takes time to vet new suppliers. Lead times for many goods are likely to remain in flux, as well. Line up some backup suppliers now, if you can.
3. Be transparent with your customers
I don’t have to tell you the value of great customer relationships. Transparency goes a long way in building those relationships. Customers would rather know about potential supply issues now than be hit with delays after they’ve placed their orders.
Technology makes it easier to communicate frequently and transparently with your customers. Setting up a mass email list is a quick and easy way to update the bulk of your customer base regularly. Social media is another great option for getting real-time updates out to your customers as often as necessary.
4. Make a long term plan for your business
Running a small business is equal parts planning and staying nimble when plans go awry. That said, making a long-term plan for your business is a great way to keep your North Star front of mind. Making – and updating – a long-term plan also helps chart where your business has been, and what paths may open up to you in the future.
While the global supply chain’s health will improve over time, it’s also not something that most small businesses have any control over. Focus instead on what you can control. Is your business’ mission still relevant? Are there new opportunities worth exploring while the old ways of doing things aren’t quite feasible? Take stock and make a long-term plan that balances your long-term goals with the more immediate realities of supply chain instability.
5. Digitize your supply chain
Digitizing your business, and your supply chain, in particular, makes it easier to plan ahead, spot problems before they turn into big problems, and pivot or spin up new lines of business, like TentCraft did when they started serving the healthcare industry last year. It’s easier than you might think to use software to track and connect planning, logistics, production, and finance. You can even use artificial intelligence (AI) enhanced tools to make smarter decisions based on models of demand and supply patterns. Remember too, that digitizing your business brings a wealth of benefits beyond helping spot and navigate supply chain issues. From increased efficiencies to flexible support for remote and hybrid work, going digital can transform any small business for the better.