As many Nova Scotian business owners can attest, supply chain challenges have been causing significant disruptions in day-to-day operations. A report from earlier this year found that nine out of 10 Canadian manufacturers are struggling with such challenges, with small and midsize retail businesses in particular among those who are being disproportionately impacted. Between shipping delays and price increases, many business owners are scrambling for solutions. In fact, a recent survey found that 70% of respondents listed their top business challenge as the increasing cost of materials, with 43% saying they’ve had to raise prices due to supply chain issues.

It seems that the end of these disruptions isn’t within view and will likely extend late into 2023, at the very least. With this in mind, business owners must consider how they can adapt. In this article we’ll focus on supplier solutions, customer communication and how to re-evaluate your business model.

What causes supply chain disruptions?

A supply chain is the network of producers, vendors, warehouses, transportation companies, distribution centres and, of course, retailers that is needed to turn a raw material into a product at your doorstep. You can think of each individual or organization in this network as a link in a chain. When a supply chain is able to anticipate, adapt, and bounce back from unexpected events that can cause disruption, it is said to have supply chain resilience. As we’ve seen over the past few years, however, sudden scarcity of raw materials can lead to significant delays and disruptions as well as increasing costs.

Supply chain disruptions aren’t a new issue, but they were most definitely exacerbated by the COVID-19 pandemic when factories and warehouses closed, disrupting fulfillment and distribution processes. When an issue or hold-up affects one link, the effects are felt all the way down the chain, which of course impacts businesses and retailers.

Supplier solutions

There are a couple of steps you can take as a business owner to mitigate supply chain challenges, starting with your suppliers. The first step, of course, is to discuss any concerns you have. Be open and honest with your supplier so you can begin working together to find solutions.

Remember that you aren’t limited to talking only with suppliers about your concerns. If you know that other businesses in your area are receiving the same or similar products, you can develop a network of communication and potentially problem solve together.

If you like to have options, consider choosing a few backup vendors in advance, or even diversify your current vendor portfolio to mitigate supply chain disruptions. You can also evaluate supply chain scenarios to predict possible shortages. This will give you insight into any issues that could occur so you can prepare in advance.

Customer communication

Transparency is key when it comes to communicating supply chain challenges with your customers. While delays and price fluctuations are no doubt inconvenient, giving customers a heads up will allow them to prepare for any disruptions in their purchases. One way to ensure transparency is to tell customers about potential delays before they place their orders, when possible. If you have an estimated arrival for a shipment of product, you might want to put this on your website or share it on social media. Setting up an email list is another great way to communicate quickly with your customers.

If you know for certain that a big shopping season is on the horizon, consider sharing reminders in advance so that customers can plan accordingly without worrying about last minute delays. You might also want to coordinate pre-orders so that customers have a chance to buy products in advance with the understanding that it may take some extra time to receive their order.

Remember to avoid being too optimistic when sharing your estimations for delays; customers prefer to receive accurate information, even if it’s not ideal. Work with your customers to plan accordingly, and they’ll appreciate your transparency. While we don’t have much control over supply chain disruptions, we do have control over how we communicate these challenges.

Rethinking your business

Supply chain disruptions provide an opportunity for you to rethink your current operational model. For example, should you revisit your market size to reduce the distance between yourself, who you serve, and who supplies you? If the pandemic taught us anything, it is that thinking locally can provide many benefits.

It could also be beneficial to look at your products and decide whether anything needs to evolve. Could a simple redesign reduce wait times on one specific material? Could you start producing more product in-house rather than outsourcing? These are important questions to ask yourself if you’re facing consistent delays. Consider financing new production tools or equipment with CUA’s Microloan Program.

Remember that rethinking your business doesn’t have to mean starting from scratch. A simple solution might be incorporating an inventory management tool (there are a variety of apps available for this) or introducing a point-of-sale system that offers inventory management features. If you anticipate sales going down, you may need to consider other costs. Taking a step back, finding creative solutions and adjusting accordingly is key.

The better way to deal with disruption

While supply chain disruptions are inconvenient and can at times be detrimental to the well-being of your business, there are ways for you to reduce these risks. Communicating with your suppliers and customers, as well as assessing your existing business model, are great places to start. Do you have a question about your business’s finances? Or are you interested in one of our loan products? Reach out to a member of our team with your questions at 902.492.6500 or info@cua.com.

Published Mar. 13, 2023

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