A Complete Guide to Surviving Supply Chain Shortages as a Small Business


Did you know that a recent U.S. Census Survey revealed that 36% of small businesses reported delays with their domestic suppliers?

Anyone who remembers the start of the COVID-19 pandemic remembers the supply chain shortages felt by grocery stores. However, since then new supply chains problems have continued to emerge.

If you’re a small business that relies on the supply chain you’re likely doing everything you can to weather the storm of shortages. The good news is that these shortages should just be temporary.

In the meantime, we’ll give you some tips on how to survive these supply chain problems until they level out.

Why Are There Supply Chain Shortages?

The COVID-19 pandemic may have kicked off supply chain shortages, but it’s far from the only cause. The real problem lies with the global shipping infrastructure.

Many businesses rely on supplies or parts from the Asia-Pacific region which are currently experiencing a slowdown in production. To make matters worse, there are labor shortages in the United States.

That means that there aren’t enough vital positions, like cargo workers and truck drivers, to deliver things on time. Three main industries were hit hard by the supply chain shortages: the auto industry, housing industry, and the just-in-time manufacturing industry.

The auto industry doesn’t have enough microchips to support the production of new cars. The housing industry doesn’t have enough raw material to finish houses.

And, manufacturing industries rely on just-in-time shipping to make their product. Make sure to check out this guide if you want to learn more about these specific supply chain shortages.

Survival Tip One – Identify Potential Risks

When you notice that delays in the supply chain are affecting your business you need to stop and identify your risks. That means finding out what’s arriving on time and what’s not.

For example, let’s say you run a restaurant. Your food might be arriving on time, but things like containers or cups might not be. Remember that each company has different risks.

The best way to identify these risks is to perform a competitive analysis. Discovering these risks is vital because it lets you develop a strategy to address them.

Survival Tip Two – Try Multiple Suppliers

Before the pandemic, many businesses relied on one supplier for their inventory. However, this is no longer a viable option. While it’s fine to have a main supplier you should diversify your options to the best of your abilities.

Ideally, you should find suppliers that come from different regions. For example, maybe your main supplier is based in Thailand. If so, then look for one in South America or Europe.

That way, if supply chain issues are affecting a certain market you can fall back on a different supplier. The longer your list of potential suppliers the more adaptive your solutions can be.

Survival Tip Three – Order in Advance

In the past, just-in-time shipping was a great way for small businesses to lower their costs of shipping while keeping their inventory. But, the supply chain shortages have changed all of that.

These days you should order as much as you can in advance. Try to predict when your business will likely be strained.

For example, if your an electronics store, then order a lot of your best-selling goods well before the holidays when you experience the most traffic.

Similarly, if you run a flower shop, then stock up on vases before Valentine’s Day comes around. This can take some research, but it’s the secret to making sure your inventory remains full when you need it.

Survival Tip Four – Make Compromises

Sadly, you may not be able to support all of the options that you used to with your small business. For example, if you’re a clothing company, you might not be able to provide a huge assortment of sizes.

Compromises are key here. Maybe you get rid of a few items or sizes that rarely sell well and focus your dollars on areas of high customer impact. Worried you will lose customers this way?

Start a system where you can special order things for them. This has worked for local book shops for decades. If they don’t have something in stock, then they can special order it for you.

Try to apply this mindset of compromise to certain parts of your business.

Survival Tip Five – Communicate With Your Customers and Clients

Odds are, you’re customers and clients know that there are supply chain issues throughout the world. You just need to turn on the news to find out. However, they might not know the extent to which these shortages are affecting your specific business.

So, communicate with them. Let your customers know what’s happening and why there are product shortages. Tell them things they can do ahead of time to make things easier.

Any loyal customer you have shouldn’t have a problem supporting you when times are tough. But, if you don’t communicate with them, then how will they know you’re struggling?

If you have an email list or a website, you can use this to communicate with your customers. If you see local customers in your store every day, then tell them or hang up a sign.

Enjoy Learning About Supply Chain Shortages? Keep Reading

Hopefully, this article helped you learn more about how to survive supply chain shortages as a small business. The most important piece of advice is to adapt to the changes as best you can.

Pretending everything is business as usual will not work. But, as long as you follow the advice in this article, it should buy you enough time until the shortages level out.

If you found this article informative, then you’re going to love some of the other topics that we have. We have categories in everything from travel to real estate. So, keep reading to learn more.