How small businesses can overcome their supply chain challenges

Managing a supply chain is difficult for every business. Small businesses may have fewer supply chain requirements, but they also don’t have the financial clout of big operations, which suppliers are understandably willing to move mountains for.

Smaller businesses need to use their size to their advantage when dealing with supply chain challenges. While big companies are locked into mega orders and negotiating long-term partnerships, small operations can be nimble in the face of a dynamic market.

Here are six tips to help your small business overcome its supply chain woes.

1. Always pay on time

It may be obvious, but the first tip is always to pay your vendors in full and on time. Small businesses have enough supply chain issues to deal with. You don’t need to make new ones for yourself.

Manage your cash flow efficiently and keep track of all your payments. This way, you’ll ensure you don’t come into conflict with suppliers and end up paying interest or even potentially ruining business relationships and reducing your options moving forward.

Plenty of payment methods are available for small businesses to better organize accounts payable, including Automated Clearing House (ACH) payments that completely remove the need for cash or checks. Other benefits of ACH payments for your small business include scheduling payment dates and recurring payments, effective cash management so you can hold onto funds for longer, and reduced transaction fees.

2. Identify risk areas

Supply chains are often complex, containing a series of components critical to business operations. Make sure your small business has a clear and comprehensive list of everything it needs, along with multiple suppliers capable of sourcing each piece. Identify any potential risks in your supply where you may only have one or two viable sources.

It’s easy for small businesses to fall into the trap of finding a single supplier that handles everything they need and leaving it at that. Unfortunately, this puts the fate of your business in the hands of one vendor. Any problems they have delivering their products are now your problem. There is no reason to introduce this level of risk to your operations, and a much healthier way to run your business is to always give yourself multiple supply chain options.

You never know if a specific product might become unavailable at short notice. However, as a smaller business needing lower quantities, you can use your agility and develop relationships with multiple suppliers. Try to find entirely separate vendors in different locations that do not work with the same manufacturers.

3. Stock management

Keeping track of your existing stock is critical, regardless of the size of your business. You need precise numbers for everything you currently have in stock and estimates for current usage to restock in time and never be left short. Accurately forecasting demand is critical for businesses to effectively manage their stock and protect themselves from unplanned product shortages.

While it’s not always possible due to budgetary constraints or storage capacities, if you have a volatile supply chain, there are benefits to trying to increase your inventory levels. In particular, this applies to critical components that are harder to come by. You can do this by bulk buying when you have the opportunity or by seeking financing options to invest more in your inventory.

4. Simplifying your supply chain

While it can help to offer a wide range of products, this places additional strain on your supply chain. More products mean expanding your supply chain, dealing with more vendors, and dealing with more complicated logistics. Where possible, remove or combine products to simplify your supply chain and save yourself time and headaches.

Even larger companies are streamlining the products they offer, consolidating operations, and building supply chain resilience to limit future disruptions. You can also use a transport management system to help you organize your supply chain and keep track of where all your products are.

5. Managing logistics

Even once you source everything you need, you still have the logistical challenge and costs associated with getting it all delivered. With rising fuel prices, logistics costs are snowballing, and small businesses need to work hard to rein in the cost of moving their supply chain products. This may mean making larger orders from fewer suppliers to save money along the way.

6. Use supply chain tools

A range of supply chain tools can help businesses stay on top of their operations. While it may seem like overkill for your small business, supply chain management (SCM) software can help you track inventory, manage logistics, and create a comprehensive, real-time database of all your supply chain information. Learn more about this at the Coupa website.

Staying in control with effective supply chain management

Having steady, reliable, and fast access to everything your business needs is one of the most challenging parts of running a business. Unfortunately, even the biggest and most well-equipped companies in the world have supply chain struggles. But, by using your size to your advantage and identifying multiple sources for each type of inventory, you can remain in control even when inevitable supply chain mishaps occur.