Ways to Protect Your Small Business Against Supply Chain Disruptions

SNEHA HULL | August 9, 2021

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COVID-19 had a drastic effect on businesses worldwide. It affected small businesses in various ways, and owners faced unpredictable supply chain disruptions.

However, the coronavirus pandemic proved to be a blessing in disguise. The supply chain executives attempted to sustain critical operations during the pandemic. This put their inventiveness, resilience, and adaptability to the test. In addition, the pandemic revealed areas of the supply chain that needed improvement, and it served as an actual test of corporate values and purpose.

Supply chain disruptions can impact small businesses in various ways, including increasing expenses, reducing revenue, eroding market share, or causing production challenges. All these factors have the potential to impact a company's bottom line adversely.

According to the Institute for Supply Management research, over 75% of the 628 firms questioned reported supply chain delays due to the COVID-19 pandemic. In the same study, 57% of respondents indicated higher wait times for orders with Chinese suppliers.

The global supply chain has been a lifeline for the response, ensuring critical medical supplies, food, and other critical commodities reach those who need them the most in time.

Challenges Faced by Supply Chain

The coronavirus caused a supply chain breakdown, adding a few more obstacles to the already existing ones. Supply chain disruption takes a variety of forms and sizes.

Supply chain and operational expenses creep up from several sources and so become prohibitively expensive. In the absence of visibility and accountability for reducing them, operational expenses might rise.

Demanding forecasting during the worldwide pandemic added another degree of complexity to the supply chain difficulties of many small businesses. COVID-19 shattered predictions for a variety of merchants and suppliers of consumer goods/services, putting them in the position of choosing how much inventory to hold or create at any moment.
  • Global supply networks are fragile and are collapsing in the face of multi-country disturbances.
  • Talent shortages across the supply chain and operations continue to place a high premium on human labor.
  • A lack of flexibility hampers the inability to meet client expectations for personalization and customization.
  • The resilience strategy was built on outmoded technologies, impairing visibility and decision-making.

Risks in the Supply Chain

The coronavirus has disturbed businesses and, more importantly, caused supply chain disruptions, altering consumer behavior, supply chains, and routes to markets, knocking businesses off balance.

Businesses must move quickly and boldly to create and execute a short-term tactical strategy that will mitigate threats to human health and ensure the continued operation of global supply chains. This may be accomplished with robust data and analytics to comprehend complexity, anticipate possible disturbances, and develop a swift reaction.

Methods for mitigating supply chain risks comprise the following:
  • Prepare resources and assembly far in advance to act as a buffer against a brief disruption.
  • Provide incentives to supply chain vendors who ensure operational continuity.
  • Monitor the situation and take the necessary response/contingency steps.
  • Utilize a recovery strategy to re-establish the original supply chain and mitigate the damage swiftly.

Impact On Supply Chain

The impact of coronavirus supply chain disruptions is severe. Small businesses' supply chains will be crucial in promptly, safely, and securely delivering goods and services.

Numerous businesses worldwide rely significantly on manufacturing and supply chains in China, Southeast Asia, and other low-cost countries. However, recent global changes have compelled these businesses to reassess their supply chains, stability, and reliability in the face of an uncertain future.

Over 30% of small companies indicated that supply chain interruptions had a material impact on their operations as per the estimates.Another third reported a negligible effect. In addition, over half indicated that the disruptions' effects are worse than three months earlier, while just 6% reported an improvement.

The impact of supply chain disruption includes substantial and operational disruptions. These disruptions range from minimizing the impacts of reduced supply to managing disruptions to logistics providers and obstacles to achieving their contractual commitments to consumers.

COVID-19 emphasized the critical nature of supply chain resilience to develop more robust long-term operations. As a result, the future repurposed and reshaped supply chains will have to include resilience and adaptation into their calculations.
  • COVID-19 is causing supply chain interruptions in 94% of Fortune 1000 firms.
  • 75% of firms have had a negative or significantly unfavorable impact on their operations.
  • 55% of businesses want to reduce their growth forecasts (or have already done so).

Here Are A Few Ways to Mitigate Supply Chain Disruptions For Your Small Business

Locate Backup Suppliers and Vendors

Identifying backup suppliers and securing them is critical for resolving supply chain problems on time; backup suppliers are the glue that holds a robust supply chain together. Unfortunately, numerous small enterprises rely on a single source for raw materials, resulting in the demise of many small firms. Manufacturers may safeguard themselves against supply shortages by arranging for backup sources in advance.

To mitigate potential risks, manufacturers should consider selecting backup suppliers from various geographical regions. This will ensure that local material shortages and disasters have a minimal impact on order fulfillment. Still, it will also aid in developing a relationship with them to step in when needed.

Finally, consider asking suppliers to carry business continuity insurance, equipment failure coverage, and other types of insurance to help decrease the probability of order fulfillment being halted.

Incorporate Supply Chain Risk Management (SCRM)

A supply chain breakdown may be a rude awakening for any small businesses that are operating normally. Supply chain management encompasses not just raw material sourcing but also the end-to-end flow of products and services and the planning and administration of operations related to sourcing, procurement, conversion, and logistics management tasks.

Utilize cutting-edge technologies to assess possible supply chain risks. For example, consider adopting AI-powered mapping and environmental analysis solutions and aggregation applications that give global overviews and cyber threat assessment systems.

Tools for supply chain risk management exist to assist you in tracking and controlling your supply chain. These tools may significantly improve the efficiency of order intake, shipping, ordering supplies, and inventory management. In addition, as supply chains grow more cloud-based or automated, it becomes increasingly important to use software to monitor your supply chain risk management program.

Customers Should Be Informed

For many small businesses, supply chain disruptions are unavoidable, and they will impact the products and services you expect to deliver. However, in this situation, it is critical to have clear communication with consumers. Keeping in touch with your consumers is essential for protecting your brand and the relationships you've worked so hard to build.

Transparency with customers is critical when dealing with supply chain disruptions. Before customers make an order, be open about the reasons for the delay and potential difficulties, and communicate with them proactively about what is happening with your business and how you react. Never, ever leave your consumers in the dark.

Bottom Line

The COVID-19 pandemic has impacted almost everyone in every country on Earth. However, not all breakdowns are internationally recognized, and supply chain disruptions are unavoidable. However, by carefully preparing your reaction, assessing possible supply chain risks, and identifying backup suppliers and vendors, you can help prepare for even the most extraordinary circumstances.

Frequently Asked Questions:

What is supply chain disruption?

A supply chain disruption occurs when the manufacturing process of items and their distribution to clients are disrupted. Disruption brings everything to a grinding halt - the traditional spanner in the works. A supply chain disruption occurs when a sudden shift or crisis — whether local or global — has a detrimental effect on that process.

What are some of the causes of supply chain disruption?

Here are some of the causes of supply chain disruption:
  • Natural disasters,
  • Transportation failures and delays,
  • Political, economic, climate, or cyber threats,
  • Pandemics,
  • Product problems, and
  • Price fluctuations.

How to handle a supply chain disruption?

You can handle a supply chain disruption by:
  • Diversifying supply base,
  • Identifying backup suppliers and vendors,
  • Creating a supply chain emergency plan,
  • Communicating with your customers,
  • Incorporating supply chain risk management (SCRM) and by
  • Adopting risk evaluation tools.


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