How Small Businesses Can Overcome Supply Chain Issues
Reading Time: 3 minutes
April 11th, 2022
Many small businesses run pretty lean when it comes to inventory, equipment, and supplies. In the past, when you ran out of stock or needed a new piece of equipment, it might have been no problem to have the products you needed in your hands within a day or two.
Today, due to ongoing supply chain issues, working in a just-in-time environment is more difficult and often more expensive — especially for Hawaii business owners.
Unfortunately, these challenges don't appear to be going away any time soon. Here's a look at what's behind these supply chain issues and how small businesses can be more strategic about meeting their needs now.
What is behind supply chain issues?
The supply chain is a specific sequence of events that need to happen in order to turn raw materials into finished products. In addition to raw materials, it also involves workers, warehouses, and container ships—all of the steps from making the product through final delivery. All of these factors contribute to a complex choreography in which one misstep can derail the entire process.
In early 2020, the pandemic disrupted that process throughout the world and suppliers and shipping companies have been struggling to keep up ever since. In addition to pandemic shutdowns, the supply chain has been dealing with increased demand for many products, as well as labor shortages. That's why every link in the supply chain is kinked right now.
Overcoming supply chain issues in your small business
In Hawaii, where roughly 99% of the goods for sale are imported, small business owners are dealing with disproportionate shipping times and increased shipping costs. Because the best defense against supply chain woes is a good offense, here are a few strategies to consider.
Have a backup plan
Many business owners have long-standing relationships with certain suppliers. But what happens if they can't provide the goods or supplies you need when you need them? If you can't get a particular brand or an item you want is on backorder, are there alternatives you can purchase for the short term? Are there other suppliers you can turn to? Start identifying alternatives and building relationships with backup suppliers now so you can call on them if needed.
You may also want to consider setting aside an emergency budget that you can tap in the event of disruptions.
Build up your inventory
Consider keeping a little more inventory on hand than you usually would. It's not always possible to invest in extra stock when you have limited capital or space. However, having a stockpile of essential products and supplies can ensure your business can continue running smoothly even if your supply chain is temporarily cut off.
Optimize your inventory management process processes
Streamlining your existing ordering processes and leveraging technology wherever possible allows you to do more with less.
For example, a modern point-of-sale system with inventory management capabilities can sync your stock levels as you make sales. This makes it easier for you to track product movements so you can make smarter decisions around purchasing and sales. If you run a retail business that is considering tapping into ecommerce, the right POS system can help you seamlessly manage your inventory for both sales channels.
Does your POS system provide the information you need to meet customer demands and sales goals? If not, Bank of Hawaii can help. Talk to one of our experienced and knowledgeable consultants to get help finding the perfect point-of-sale solutions for your store, restaurant, or other small business.
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