Prior to the outbreak of COVID-19, many small businesses probably never thought much about disruptions to their supply chain.
According to a US survey, more than half of small businesses do not believe the loss of a main supplier would have a serious impact on their business, yet three-quarters of them suffer at least one supply chain disruption annually.
Naturally the business owners are focused on managing the bottom line and, consequently, are unware of the devastating impact supply chain disruption can have on that bottom line.
According to another US study of small businesses, the top five consequences of disruption are loss of productivity (58 percent); customer complaints (40 percent); increased cost of working (39 percent); loss of revenue (38 percent); and impaired service outcomes (36 percent).Here is a list of just some supply chain disruptions that can affect you:
- Pandemics - well, we know about that impact of that one and have to live with for some time to come.
- Natural disasters - again one familiar to us after the Christchurch-Kaikoura earthquakes.
- Transportation failures and delays – with globalisation, even small businesses rely increasingly on using overseas suppliers and in the present world, importation is problematic.
- Product problems - no business wants to send sub-par goods to customers or have customers’ shipments delayed because of faulty products.
- Price fluctuations - price changes for suppliers in your chain can also create disruptions as you may need to find a cheaper supplier and that can take time.
- Cyber attacks – someone in your supply chain can inadvertently open you up to attacks and the results can be devastating.
“Review where potential supply chain disruptions are most likely to have a financial impact”
So what can I do to counter supply chain disruptions?
Carry out a supply chain vulnerability audit
Prepare a supply chain emergency backup plan
Have an emergency budget
Constantly communicate with your suppliers
Diversify your supply chain
Build up your inventory
What will really impact on your cash flow?
Find backup suppliers
Are there other suppliers in different areas or even countries that can fill the gaps if your usual supplier cannot help?
What components of the supply chain are critical?
What do you absolutely need to continue operating? Look to see where you can find alternative suppliers for critical components.
Be flexible when the disruptions occur
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