Supply chain shortages can occur for many reasons, including politics, the weather, as well as economic factors like oil price changes. Recently, the Covid-19 pandemic caused a shift in consumer patterns, putting pressure on supply chains resulting in shortages. For small businesses, keeping adequate stock in the face of a supply chain crisis can be difficult. If you are a small business owner, here are a few tips to help you cope with supply chain challenges and ensure business continuity.
1. Monitor Your Stock and Increase It Whenever Possible
Monitoring your stock is essential even with a working supply chain. Doing so enables you to manage your costs effectively and ensure you meet your customer’s demands. When dealing with supply chain shortages or logistics issues, the need for inventory tracking increases for planning and prioritization purposes. When you monitor your inventory, you know what is available and what you need to replenish. During a shortage, you can prioritize more popular products and ensure they are available. It may be difficult to stock the items when they run out.
Additionally, utilize every opportunity to increase your inventory. The more stock you have, the longer you can continue normal business operations during a shortage. Look out for discounts to cut costs on your purchases, and buy as much as possible whenever a popular item becomes available. On the same note, reduce waste to have more space for inventory through measures like reusing and proper resource management. You can take up help from commercial trash pickup services to ease the disposal management process.
2. Implement a Contingency Plan
Creativity is necessary to keep your business going and protect your brand image during a supply chain shortage. When your customers do not get the products they expect from your business, the result is a negative customer experience which has a negative impact s on your brand image.
To cope with a supply chain crisis and continue offering consumers what they want, consider the following strategies.
Make alterations to the products you offer, such as reducing the quantity or through dilution.
Shift customer demand to available products that you can deliver within the expected timeline. You may need marketing strategies like pricing incentives, promotions, and advertising to persuade consumers to buy the available items.
Create a waiting list to make the product exclusive. The exclusivity will also justify higher prices.
Increase the prices of low–supply products to make consumers choose cheaper alternatives.
As part of your contingency plan, set aside an emergency budget specifically for use when a supply chain disruption occurs.
3. Diversify your Supply Chain
It is crucial to have alternatives you can fall back on when a shortage occurs. You can do this by diversifying your supply chain instead of counting on one source. When you partner with multiple manufacturers or suppliers, you reduce your risk of losing customers or business during a shortage as you can still meet customer needs.
Diversification protects your business from supply chain shortages due to reasons specific to a certain region, such as politics or natural disasters. What's more, you may be missing out on innovations from other suppliers when you only stick to one source. As you look for alternatives, remember that your consumers expect uniformity in your products. Therefore, research is necessary when looking for alternative suppliers to ensure optimal productivity.
4. Invest in Technology
One of the best ways to improve efficiency and deal with supply chain shortages is through digitization and automation. The right technology can help you plan effectively to manage the effects of a supply chain shortage. You can utilize automation and analytics to optimize inventory for margins and identify stock imbalances to facilitate redistribution.
Supply chain management software can help you monitor your inventory, manage shipping, and identify which items or products are moving fast. In case of a labor shortage, automation can reduce staff workload and the need for a large team. For example, you can utilize chatbots to answer common customer concerns and minimize the number of queries your staff handles.
5. Stay Informed
Supply chain disruptions usually occur due to events that are easy to monitor, like oil prices and politics. Therefore, keeping up with industry trends can help you get ahead of an oncoming crisis. With the right information, you can effectively minimize the adverse effects of a supply chain shortage by implementing strategies to counter the disruption. For example, if industry news points to issues with logistics and transportation of materials in a specific location, you can look for alternative suppliers much early.
While it may be impossible to predict every supply chain shortage or problem, being updated gives you the upper hand. Also, ensure that your staff is well-trained on the latest way of doing things to boost efficiency and productivity. Providing opportunities for professional development also contributes to employee retention and prevents labor shortages in your business.
Given the uncertainty of supply chains, resilience and flexibility can make a difference between business success and failure. With the above tips, you will be more prepared to deal with a supply chain shortage and protect your business in case of a future crisis.
We, at OpenGrowth, are committed to keeping you updated with the best content on the latest trendy topics from any major field. Also, both your feedback and suggestions are valuable to us. So, do share them in the comment section below.