Supply chain disruptions continue to effect small to medium-sized businesses (SMBs) throughout the U.S.

Back in 2021, many local SMBs thought the worst of the pandemic-related supply issues was behind them. Unfortunately, they've persisted throughout 2022, with customer back orders becoming the norm. Clothing retailers cannot specialize and restaurant owners have moved items off their menus when ingredients can’t be maintained. 

Degrees of Suffering

Do SMBs have greater supply chain woes than larger companies? Data from an SMB Retail Supply Chain survey conducted by Software Advice in March 2022 indicate that the answer is yes, and these difficulties are expected to last through 2023.

While larger businesses are certainly not immune to these issues, because they can route materials more quickly in more ways and are also first in line with suppliers because of the sheer scale of their purchases, they have a major advantage in procuring inventory. Indeed, the survey finds that 9 of 10 SMB owners agree with this sentiment.

Nearly 60% say it’s taking “somewhat longer” to “much longer” to procure inventory than in 2021. More than one-third of SMB retailers are paying 20% more for shipping than 12 months ago, and 50% have increased their retail prices to offset the increased supply chain costs. 

Cause and Effect

The Software Advice report cites destabilizing trends, such as inflation, B2B (business-to-business) shipping moving to D2C (direct-to-customer), and increasingly tense global trade, as contributing to the current supply chain crisis.

Focusing too much on being efficient, or what’s known as the just-in-time model, has highlighted how prone supply chains are to disruption. Companies are contending with this increased need for sustainability alongside an explosion of e-commerce.

Additionally, the demand for physical goods is surging and manufacturers are often understaffed. In short, the supply chain cannot keep up.  

SMB Solutions

Many small to medium-sized business owners are coping with the disruptions by looking carefully at their own sales and operating processes and using technology to create rolling forecasts regarding what needs to be sourced and when. Some are also investing in a dedicated logistics person or team. 

One of the first steps toward recovery is supply-chain transparency, which companies can achieve by mapping their networks fully from tier-one suppliers on down, so they understand the exact composition of their chain. Having multiple suppliers can also help reduce costs associated with production delays and improve the operations of the chain as a whole.

There are resources for SMBs to address supply chain challenges as the business community focuses more on this issue, and as always, working with experienced lending partners can help your business be prepared as issues and solutions arise.

While the COVID-19-initiated supply chain crisis is likely to cause further problems for SMBs in 2023, it’s encouraging to see the community working toward new processes emphasizing sustainability that will hopefully prevent similar issues in the future. 

For business needs that fall outside the typical day-to-day, we can help you find a solution.