Supply Chain Disruption From Small to Large Businesses!

Supply Chain Disruption

This year was supposed to be the year of recovery. Instead, we’ve seen the supply chain system go from bad to worse with extensive Supply Chain disruption.

Literally all types of raw materials have been hit with shortages in the face of mass demand as businesses seek to hoard and pre-order as much as possible, deal with the freight gridlock from Asia to the rest of the world, and satisfy the huge demand of the consumer.

This past summer saw factories in China being forced to operate 1 to 3 days a week in order to conserve energy, the cost of a container exceeding $20,000, and small businesses being priced out from being able to order inventory as manufacturers are holding and allocating what inventory they have and produce to the mass retailers.

Due to China’s manufacturing dominance in the global supply chain, these events have created a vicious cycle, further straining the currently jammed supply chain.

Small online businesses such as The Crown Choice have mentioned that “due to the exorbitant cost of shipping, we have had to raise prices to our customers as well as order eight months worth of inventory, eighth months in advance. Yet on multiple occasions this year, our orders were delayed another couple of months because the manufacturer couldn’t get raw materials from their suppliers.” says Hanna from The Crown Choice.

“We expanded to selling on Etsy, Walmart, Ebay and other platforms even though we currently sell on Amazon too. We constantly use our Amazon calculator to ensure our profit margins are intact and review our pricing every week to make sure that priorities are given to the profitable products. We are no longer afraid to raise prices because if we don’t, we will go out of business. The repercussions of easy money, endless money printing and handouts was a short term band-aid and now we are seeing the consequences”

This situation isn’t all that different with mass retailers who are sitting with empty shelves in many places. From food, to bottled water, shelving, brooms and lumber. Home Depot, Walmart, Costco and many retailers have decades of experience, but none have experienced a situation like now.

Due to the slow moving nature of mass retailers, small businesses that have taken measures to solidify and create redundancies in their supply chain are able to be nimble and navigate through these difficult times with creativity.

Etail Express who offer outsourced bookkeeping, have seen their clients who were quick to adapt and adjust their inventory management and supply chain do surprisingly well compared to larger clients who were not able to change their legacy systems and embedded processes.

“The small online businesses who increased their product portfolio and also number of vendors to be less reliant on a single point of failure, have really excelled. Conversely, we have seen more established companies struggle as they have found it difficult to adjust to the constant changes in today’s environment.” says Etail Express.

Here are 5 tips for small businesses to recover and exceed their current situation:

  1. Approach more vendors to expand your product portfolio
  2. If manufacturing overseas, see if the product can be manufactured in another country or locally
  3. Consider using a 3PL
  4. Identify potential points of failure and create redundancies
  5. Renegotiate pricing with suppliers and vendors

This article has been contributed on behalf of Gorilla ROI, an Amazon Connector to Google Sheets for ecommerce sellers to sync their data.

Supply Chain disruption article and permission to publish here provided by Jae Jun. Originally written for Supply Chain Game Changer and published on November 15, 2021.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.