Supply chain management is a core business concept.
Even if you run a small business that prides itself on producing things in-house, you have to have supplies. Without the key materials on hand needed to perform day-to-day business operations, you’re dead in the water.
In this article, we’ll explore the concept of supply chain management. We’ll outline what it is, what it involves, and what it takes to stay on top of it. We’ll also address some of the current supply chain challenges small business owners are facing due to COVID-19.
If you’re looking for practical, actionable tips for managing your small business supply chain, we invite you to keep reading.
What is supply chain management?
“Supplies” include everything from basic business supplies, like paper, pens and paper clips, to raw production materials and technology tools.
Supply chain management is the entire process of managing all of that stuff. Proper supply chain management ensures you always have what you need to do what you do. Even if you don’t have a formal process for supply chain management, you’re already doing it. It’s a core part of how any successful business functions.
Supply chain management includes the following:
- Planning: End-to-end supply chain design, including projected needs and cost.
- Sourcing: Choosing the sources for all supplies—anyone from Amazon to specialized service providers.
- Making: The assembly of raw goods into a finalized, saleable product or service. For a restaurant, cooking the food. For a mechanic, a finished repair job. For an attorney, a completed case.
- Delivering: Coordinating customer orders, from the request to the handoff of goods and services.
- Returning: The process for dealing with defective or unwanted materials.
- Enabling: All the ways different departments and individuals in your company facilitate and support the supply chain.
“Supply chain management is the handling of the entire production flow of a good or service—starting from the raw components all the way to delivering the final product to the consumer.” – IBM
What happens when the supply chain is disrupted?
When a supply chain is disrupted, you may lose access to the raw materials needed to conduct business. If an auto repair shop can’t order parts, it can’t complete repairs. If a restaurant can’t restock ingredients, it can’t make food.
And those are the more tangible elements of supply chain disruption. If we think a little more broadly in terms of the things you need to run a business, there are other possible issues.
What if you’re short-staffed? What if you don’t have the cash flow to support daily operations? What if restrictions, like the ones already put into place in some cities in response to COVID-19, keep your customers from being able to come to you?
When your supply chain is disrupted, two key metrics become critical.
- Time to Survive (TTS): How long you can keep up with customer demand with a disruption in the supply chain.
- Time to Recover (TTR): How long will it take you to get back to normal after a disruption.
If you haven’t already calculated these numbers, you should. Together, these metrics will help you make short- and long-term plans to ensure your business weathers the storm.
Let the data guide you—not knee-jerk reactions that may or may not meet your needs and your customers’ needs.
How COVID-19 is affecting supply chain management
For many businesses, the coronavirus represents a significant disruption to the supply chain. Even if you have everything you need to keep right on providing your products and services, your customers are likely changing their buying habits.
We’re in uncharted territory. Much like the spread of the virus, itself, the impact on supply chain management and business health changes daily.
As of the writing of this article, we know there’s speculation that some US factories will be forced to close. Market analysts are already talking about the impact on back-to-school and holiday shopping trends. And the automotive industry, heavily dependent on parts manufactured in China, is struggling to adjust.
While COVID-19 certainly presents small businesses with challenges, there are things you can do as a small business owner to minimize the impact. If you’re trying to decide how to navigate this thing and come out the other side ready to shift back into growth mode, we want to help.
And supply chain management is a critical component.
Supply chain management strategies for the immediate future
Right now, we’re dealing with a situation that’s unfolding right in front of us. For some small business owners, things change on a day-to-day basis.
With that in mind, here are some high-level strategies to help you maintain focus.
If you turn on the news right now, you’re going to find yourself inundated with all kinds of predictions. The sheer uncertainty of it makes it a scary thing. Some business leaders have done a great job of keeping their cool and some are clearly panicked.
Whatever you’re up against, be sure to make sure you’re in the right frame of mind before making decisions.
Already, we’re seeing the advantages of agility. Companies that are able to reconfigure, adjust and shift strategies are a few steps ahead of companies that are slow to react.
Small businesses can generally shift gears more quickly than their big business counterparts. Smaller leadership teams and more flexible business processes allow for quick changes. That plays to your advantage. Lean into that.
Now is not the time to shut your team out. Instead, do your best to keep them informed… and ask for their help.
Invite feedback, ideas, suggestions and advice. If you’re facing a tough supply chain problem, brainstorm with your team. Their insights might be the thing that proves to be invaluable.
There’s plenty of information out there about COVID-19. That’s not the issue. If anything, the challenge lies in not getting overwhelmed by all the reports, interviews and articles.
So pick a handful of sources at most—we recommend the CDC’s official site as one of them. Keep an eye on the most important developments, especially the ones that impact your business, your customers and your local area.
Remember what matters
This pandemic is giving us all a healthy dose of perspective. As you shift priorities and make tough decisions, ground yourself with constant reminders of what matters most to you.
Make sure every decision you make—from supply chain management to staffing choices to your social media presence during the outbreak—lines up with your core values.
4 options for dealing with supply chain management challenges
Because we work with a lot of small business owners, we know there are plenty of small businesses out there looking for practical ways to adjust during the COVID-19 outbreak. We don’t want to get all philosophical on you and fail to share practical tips you can actually use.
So here are 4 things you can do right now to help with any supply chain challenges you may be facing.
1. Assess what you have
Start by seeing what’s in stock right now. That includes what you have on hand, what’s on its way for delivery, and even what your customer interaction is like right now.
Resist the urge to speculate. Your gut feeling about what’s in the stock room or how many orders have come in today could easily be high or low. But data doesn’t lie.
Instead of trusting your gut, go with the numbers.
2. Make on-the-fly adjustments
Here’s where the rubber meets the road. You may need to adjust some of your product or service offerings in the short-term.
If you run a restaurant, you may need to temporarily alter your menu. If you run a retail store, this sure is a good time to focus on online sales. If you manage an automotive shop, foot traffic is likely low right now, but you could still offer gift cards.
Do more than simply weathering the storm. Find ways to continue to serve your customers without putting them or your staff at risk.
“In reality there are hundreds of supply chain metrics. The art is to find the right ones for your industry and your business.” – CIO
3. Get the most out of what you already have
Inefficient inventory management is never good. Right now, it could be crippling.
Do what you can to reduce waste and stretch your current supply as far as it will reasonably go. Urge your employees to be careful—with supplies, their time, and every customer interaction.
And speaking of your customers, ask yourself what they’re dealing with right now and how you can help. The businesses that come out the other side of this thing with glowing reputations will be the ones that put their customers first.
4. Use appropriate substitutions when you can
Let’s say you’re a restaurant owner. Sure, you could follow our advice in tip #2 and simply remove items from your menu as ingredients run out. But there may be a better strategy.
What if, instead, you adjusted your recipes to allow for more overall food production, stretching your current stock further?
No, it’s not ideal. But if there are ways to tweak your products and services so you can keep working with your customers, even during a short-fall, that’s ultimately a strong move for your business.
Supply chain management is always an important aspect of business strategy. Right now, as we make daily adjustments to accommodate for COVID-19, it’s critical.
Do what you can to get out in front of potential supply chain disruptions. And if you’re already seeing a dip in available supplies or customers, start brainstorming with your team to find creative solutions.
Whatever you do, please continue to make the safety and well being of your staff and your customers a top priority.