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The UPS Store Small Business blog
  • 31 January 2022
  • Liam Edwardson

How to Manage Your Small Business Through Supply Chain Issues

Thanks to the pandemic, surging global demand for products and services has been foiled by escalating supply chain issues. Heightened shipping costs, wait times and logistics issues have adversely affected small business owners on a wide scale. 

Though many pandemic-related restrictions have weakened in recent months, increasing demand of goods and services means disruptions in the supply chain will most likely continue. Here are a few ways to combat those disruptions:

Supply chain solution 1: Track your stock

clothing designer on her laptop ordering materials

Even during the best of times, it is important to track and manage your inventory. With unavoidable supply chain shortages, it is imperative to know what you have in stock and what you do not. Small businesses everywhere are constantly running out of popular items and unable to restock them. 

Supply chain solution 2: Smartly manage inventory

Because you have to consider time, labor and how much physical space you have, as well as your budget, it is not always realistic to expand your inventory. But you should still consider the following options:

  • Increase your storage capacity, or consider renting space.
  • When a best-selling product becomes available, buy as much of it as you can.
  • Stock up on dramatically discounted items.
  • Procure financing to invest in more inventory. 

Supply chain solution 3: Make alliances with key suppliers

It is crucial to genuinely listen to and partner with your suppliers to achieve shared goals, which may include:

  • Strengthening the business-supplier relationship
  • Jointly and quickly resolving problems
  • Agreeing on ways to ensure performance targets are met

This mutually beneficial process will enable you to get the most out of your supplier network.

Supply chain solution 4: Diversify, diversify, diversify

Customers have come to expect ready availability and prompt shipping when purchasing a product or service from your small business. Unfortunately, with ongoing supply chain challenges, retailers may not be able to fulfill those expectations. 

Small businesses should immediately consider supply chain diversification. Spreading out orders across a wider range of suppliers can reduce the risk of back orders and drawn-out shipping times.

Supply chain diversification also allows small business owners to choose suppliers who are more cost-effective. That can be of great solace now that disruptions to the supply chain have caused manufacturing and shipping costs around the world to spike.

Supply chain solution 5: Use the latest tools to manage your supply chain

Historically, supply chain management (SCM) software has mainly been used by larger businesses, which may have to deal with and manage multiple departments, locations and niches. However, SCM can be of great help to small businesses, helping to track inventory, manage shipping and understand which items are moving fastest, while providing up-to-the-minute information on your supply chain.

Supply chain solution 6: Resist overselling and overpromising

With small businesses facing record-breaking order rates and supply chain challenges on a global scale, the last thing small business owners want to face is overselling a product. The consumer backlash can be embarrassing, and those who order a product but then lose out due to lack of inventory might never do business with that company again. 

It is a good idea to avoid overselling, particularly during holidays. Establish a fixed standard level of stock with each product, particularly high-performing items, and identify the minimum amount of inventory to carry at all times. That way you will be able to identify restock needs before your inventory is depleted. And if you are selling products through channels other than your main website, ensure your inventory is continuously updated. 

In the event of overselling a product, be sure to thoroughly communicate with customers as soon as the issue comes to your attention. For example, notify customers that their orders will not be fulfilled by the holidays long before the holidays. You may even put forth incentives like a discount code to entice customers to come back. 

Supply chain solution 7: Be upfront with your customers

Supply chain issues have been in the conversation for a while now, so people should realize that many items may be unavailable or may take longer to get to them. Explain on your website that orders may be delayed due to circumstances beyond your control. If you are having challenges with certain products, let people know about this before they place orders. Customers do not want surprises, such as expecting something to arrive in a few days and then having to wait a month. Strive to be completely transparent with your customers.

It may take years to repair the damage COVID-19 has inflicted on retail supply chains, not only in the United States but also around the world. Small businesses must endeavor to adapt, manage and implement new practices to address any current and future supply chain adversities.

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