Supply Chain Issues Can Cause Pain

By Marshall Doak, SOU SBDC Director

Managing a small business is one of the toughest jobs most people ever take on in life. All of the difficulties large businesses have to deal with are part of the everyday for small businesses also, only small businesses do not typically have the resources available that large ones do to cope with the demands. To maintain the agility and reactivity that small businesses use to remain viable and profitable in today’s chaotic and confusing marketplace, additional attention now needs to be put into managing the supply chain feeding your business. Failure to account for supply chain difficulties can spell doom for an unprepared business. Supply chains are constructed on a ‘pull-through’ dynamic, or, your sales create orders to your suppliers, and their orders travel all the way back to the point of origin for the materials used to fabricate the components you sell retail. With the current chaos in the supply chain, the scale of the problems are so large that small businesses, by themselves, have little ability to control outcomes. When interruptions occur and the supply-chain becomes unbalanced, it can be extremely difficult to re-establish equilibrium again. Still, there are a few things to consider implementing for success: 

• At this time, you do not have the luxury of managing your business ‘laissez-faire’ or hands-off; active management is called for in all aspects of your operation; 
  • Put the tools in place that will help you manage, starting with using your financial information to make decisions, such as: 
  • Avoiding ‘out-of-stock’ issues, as you can’t sell what you don’t have in hand; 
  • Calculate your reorder points and safety stocks to minimize costs and have adequate supplies of goods; 
  • Discontinue JIT deliveries if suppliers develop supply-chain delivery problems to you; 
  • Understand your inventory turn ratios and what that means for your operation; 
  • Increase your cash holdings and obtain a line of credit for emergency use. 
• Communication is an increasingly important part of your business, with the time-value of information flow critical to success;  
  • Communicate up and down your supply chain;
  • Stay knowledgeable so you can react to upcoming issues in advance; 
  • Be honest with your customers to retain them. 
• Take an inventory and keep it current! 
• Form strategic partnerships: 
  • With your suppliers and customers where it makes sense; 
  • With competitors to pool purchasing;
  • With additional vendors to assure continuous supply; 
  • With distributors to send products to your clients.
    

We are here to assist you in making the decisions you need to make to stay ahead of the challenges you are experiencing in supply chain management. Contact us for an appointment to work on your supply issues today at: sbdc@sou.edu or 541-552-8300.