Supply chain management: Tips for small business

It can be  particularly hard for small business owners who don’t have the same resources or corporate connections as big companies. But there’s still hope for the little players. Check out these tips to see how to respond to the global supply chain management challenges.

1. Fail, learn, and adapt

The best mindset to bring to managing supply chain issues is resilience. It’s important to remain vigilant and stay informed. Make sure to communicate with your employees and suppliers as problems arise. Some things to watch for include:

• Government regulations and guideline updates
• Labor shortages news
• Port congestion and delays
• Bad weather

When failures do happen, remember to get back up and learn from your mistakes. You’ll be better equipped for future scenarios when you adapt.

2. Localize your resources

Many small business owners begin localizing their suppliers to avoid vying for expensive spots on boats when importing.

Local sourcing offers a more permanent solution that could boost your bottom line.

Outsourcing materials and products from overseas can save money in a perfect scenario. You don’t want to risk waiting around for delayed materials or products. It’s better to find suppliers locally to ensure your shipments arrive on time.

3. Use freight forwarders

It may not be possible in every case to localize. Some businesses may find that they still need to work overseas shipments into their supply chain management plan. This is where a good freight forwarding company can really come in handy.

Freight forwarders are shipment logistics companies that help small and large companies with overseas shipments.

They can help with things like:

• Setting up orders
• Tracking products
• Negotiating better rates and timing slots

Supply chain categorization

To effectively manage your supply chain using freight forwarders, consider categorizing them based on specific criteria. Key factors include:

Services offered

Different freight forwarders specialize in various services such as air freight, ocean freight, land transportation, customs brokerage, and specialized logistics solutions. Choose a forwarder that aligns with your specific shipping needs.

Regional expertise

Assess the regions and countries each forwarder serves. Selecting a forwarder with strong presence and expertise in your target markets can enhance reliability and efficiency.

Industry specialization

Some freight forwarders focus on particular industries like automotive, healthcare, or perishables. Partnering with a forwarder experienced in your industry can provide tailored solutions and better handling of specialized goods.

Scale of operations

Consider the size and capacity of the freight forwarder. Larger forwarders like Kuehne + Nagel or DHL have extensive global networks and can handle high volumes, whereas smaller forwarders might offer more personalized services.

Management tips for freight forwarders

Once you’ve categorized potential freight forwarders, implement effective management strategies to optimize your supply chain:

Integrated digital platforms

Utilize freight forwarders that offer digital tools and online portals for tracking shipments, managing orders, and accessing real-time data. Platforms like Kuehne + Nagel’s myKN or DB Schenker’s eSchenker enhance visibility and control over your shipments.

Advanced tracking and reporting

Implement systems that provide detailed tracking, data analysis, and reporting features. This allows you to monitor performance metrics, identify bottlenecks, and make informed decisions.

Collaborative communication

Choose freight forwarders that emphasize strong communication and support. Effective collaboration ensures that any issues are promptly addressed and resolved.

Capacity management

Ensure your chosen freight forwarder can scale with your business needs. Assess their annual handling capacity in TEUs and air metric tons to match your growth projections.

Sustainability practices

Partner with forwarders committed to sustainable logistics solutions, such as carbon-free transportation and smart packaging, to align with your sustainability goals.

Leveraging top freight forwarders

Freight forwarders like DHL, CEVA Logistics, and C.H. Robinson offer a range of specialized services and global coverage that can significantly enhance your supply chain management. By categorizing and managing your freight forwarders based on the criteria above, you can ensure better implementation and results for your business.

4. Embrace diverse supply chain models and future trends

As the industry evolves, adopting diverse supply chain models can prepare your business for upcoming developments. Two key trends to consider are autonomous supply chains and circular supply chains.

Autonomous supply chains

Leveraging digital solutions and automation can significantly enhance supply chain efficiency. Utilizing freight forwarders that offer advanced tracking tools, such as integrated online portals and real-time visibility features, allows for better management and coordination of shipments. 

These technologies enable businesses to streamline operations, reduce human error, and respond swiftly to changes in demand or disruptions.

Circular supply chains

Adopting circular supply chain practices focuses on sustainability and resource efficiency. This involves minimizing waste, recycling materials, and reusing products throughout the supply chain. 

Partnering with freight forwarders that offer green logistics solutions, such as carbon-free transportation and smart packaging, supports the implementation of circular supply chains. These practices not only benefit the environment but also enhance your brand’s reputation and appeal to eco-conscious consumers.

5. Secure access to capital

A healthy cash flow and capital are essential in any scenario. Many factories and warehouses are forced to stop or slow production due to outbreaks or labour shortages, which means getting your goods to US is getting more expensive. 

In these cases, access to funding helps small businesses quickly pivot to alternative solutions within their supply chain management.

A flexible line of credit with a bank is essential for making quick decisions in times of need.

For example, you may find there’s a sudden rise in demand for one of your products. Having the extra funds available can help you fulfill and supply orders in a rush.

6. Track KPIs in your supply chain

Key performance indicators, also known as KPIs, are a measurement tool used to determine how well a business is accomplishing certain tasks.

In the context of supply chain management, tracking your KPIs starts with determining what success looks like for you. 

Small businesses can use KPIs to determine what their current process looks like and the areas they can improve on to reach their long-term goals. Examples of supply chain KPIs are:

• Total number of shipments in a time period
• Capacity utilization
• Volume leveraging
• Task integration
• Rate competitiveness
• Percentage of on-time shipments
• Order accuracy
• Inventory accuracy
• Product damages
• Product returns

Small business owners can also use KPIs to see:

• Where there are opportunities to save money
• How they can better use the storage space they have
• How to integrate tasks to improve efficiency
• If they are getting the most competitive rates

Overall, KPIs can help small business owners adapt and make better supply chain decisions in many ways.

7. Use digital transformation and advanced technologies in supply chain management

Incorporating advanced technologies like AI, machine learning, IoT, and blockchain is revolutionizing supply chain management. 

These technologies enhance transparency and efficiency by providing real-time data and analytics, automating processes, and securing transactions. 

For instance, freight forwarders such as Kuehne + Nagel utilize their myKN platform to help customers track and manage shipments seamlessly. DHL leverages high-tech infrastructure and digital solutions to offer full transparency over shipments, while DB Schenker’s internal tracking tool ‘eSchenker’ provides data analysis and reporting features. 

Expeditors International employs SaaS offerings like ocean forecasting and sensor-based logistics to optimize supply chain operations. 

Hellmann Worldwide Logistics enhances operational efficiencies with smart tracking and real-time visibility, ensuring that shipments are managed effectively throughout the supply chain.

These integrated digital solutions not only streamline operational processes but also centralize financial data, allowing for comprehensive financial management. 

By consolidating all shipping-related financial transactions and data into a single platform, businesses can achieve better cost optimization, efficient expense tracking, and more accurate financial forecasting. 

This centralization supports improved budgeting and financial planning, ultimately enhancing the overall financial health of the supply chain.

Examples of supply chain disruptions

Now let’s look at some of the disruptions business owners are facing in supply chain management. Take note of how they could affect your business and try to develop a game plan to stay ahead of the game.

Shipping woes

Many small businesses are facing shipment disruptions that affect imported materials and products. Some of these complications include:

• Competing for a freight shipment spot on boats
• Limited product availability
• Rising costs of shipping
• Shipping delays due to port congestion

Product delays don’t just affect customers; they affect how you do business as well. Think about key sales times like Valentine’s Day or the holiday shopping season. 

If you don’t have enough product to fill your shop, you might find yourself struggling to stay afloat with hardly anything to offer. Additionally, the high rise in shipping costs can cut into profit margins and make it difficult to make money — even if there is product to sell.

Material shortages

Another issue in supply chain management is material shortages. Some small businesses have warehouses filled with products but face shortages in materials like foam packing.

A shortage like this might mean that you can’t get products safely to stores or customers.

In this case, a business owner would need to:

• Find another supplier in a short amount of time
• Compete against other companies looking to localize their own materials
• Determine if they have enough cash flow to maintain growth

A huge amount of cash flow is often reserved for purchasing products, and material scarcity can leave your small business in a vulnerable position. If you can’t keep up with demand, customers are likely to turn to big box stores that can.

Demand forecasting

Another major challenge in supply chain management is demand forecasting. How much of a certain product should I stock up on? Demand is high now, but will it be the same in the future? ]Is my current inventory or service even possible to distribute? 

These questions loom over entrepreneurs as they try to adapt. Entrepreneurs will need to stay flexible and be intentional with their business’s demand to be successful.

How to stay ahead of the game

Regardless of the challenges in supply chain management, we are still seeing small businesses adapt and thrive. It’s not easy, but it is possible.

While larger corporations may have an upper hand in resources, there are still advantages for small businesses facing supply chain management issues. Instead of waiting weeks and months on end for inventory, entrepreneurs are finding local suppliers just a short drive away. 

Not only does this help solve supply chain issues, but it also builds local relationships for a more permanent shift to local sources.

Stay loose, stay flexible

Small business owners have to remain resilient. You’ll need to keep an eye on how governments handle jurisdiction changes or if a certain ingredient suddenly becomes scarce. Other areas to be aware of in supply chain management include:

• Watching current trends in your industry market
• Communicating with stakeholders on problems and solutions
• Localizing your suppliers and diversifying where products come from
• Adopting diverse supply chain models like autonomous and circular supply chains
• Implementing advanced technologies such as AI, machine learning, IoT, and blockchain to enhance transparency and efficiency

Remember, it’s important to stay on top of supply chain issues and adapt to better solutions. Planning ahead will help ensure your small business survives in challenging climates.