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BizReport : Internet Marketing 101 : May 20, 2020

4 Supply Chain Disruptions You Aren't Thinking About

Your customers stay at home and your employees telecommute, but they aren't the only people affected by the COVID-19 pandemic.

Suppliers feel the same pressures as everyone else. Even if you don't visit in person to pick up the items you need to keep your business running, you can't ignore the possibility that your supply chain may look dramatically different for a while.

According to a special ISM survey, this pandemic has already disrupted the supply chains for nearly 75% of American businesses. That number will only increase as the fallout from the pandemic becomes more apparent.

Without a reliable supply chain, your business cannot continue to provide your customers with the products and services on which they depend. Unanticipated problems within your supply chain can lead to disaster when you lack a contingency plan. Stay safe and insulate your business from the worst by watching out for these unexpected supply chain disruptions.

Your suppliers may experience their own back-end issues.

In some cases, you may discover that suppliers have nothing to offer, even if you have money to spend. Suppliers depend on their own suppliers, and disruptions in their supply chains trickle down to disrupt your own. The only way to deal with the issue is to create contingency plans in case your primary sources can't deliver.

You may find that every alternative supplier suffers from the same problem, especially if most suppliers depend on the same provider of raw materials. If that's the case, plan for your business to shift temporarily toward other products and services. Focus more on communicating with customers, creating new content, and helping buyers make the most of the products they already have. When your suppliers find their footing again, you will find it easier to pick up where you left off if you keep the lines of communication open with your target audience.

Your purchasing power may suffer.

When your suppliers don't suffer from a lack of supply, massive increase in demand can still overwhelm them. You may find that your money suddenly doesn't buy as much as it did before. That doesn't necessarily mean that your suppliers are gouging you on price -- only that other businesses like yours are doing whatever it takes to get what they need.

Don't get involved in a price war. You can't save your business by overspending on essentials. Look into joining a group purchasing organization, or GPO, which can act as a sort of union for you and other businesses to get fairer pricing and terms from big suppliers. By promising certain amounts of volume and reliable payment, GPOs empower small businesses to get supplier deals normally reserved for large enterprises. Your suppliers may not treat you as a big deal on your own, but they can't ignore the demands of dozens of hundreds of companies at once.

Your customers' demands may shift.

Why pour all your energies into maintaining a supply chain that no longer serves the needs of your affected customers? The coronavirus has changed everything, including how people live, shop, eat, and entertain themselves. Even if your business provides essential services, your customers may change why, when, and how much they consume your products. Working to preserve a supply chain that meets the needs of a pre-pandemic population could leave you in a bad situation when customer expectations shift.

Use this opportunity to collect data on customer needs. What do they wish were different about your product line, your stock, or how they accessed that stock? What could your business do better to meet them more than halfway? As the pandemic continues to develop across the world, shelter-in-place orders could become semi-permanent ways of life for the indefinite future. Rather than waiting for the storm to pass, go directly to your customers and use their feedback to inform your supply chain priorities.

Increased unemployment will create a ripple effect.

Recent figures estimate that unemployment in the United States could reach an astounding 32% because of the coronavirus pandemic, a higher rate than the country experienced during the Great Depression of the 1930s. While the experts making the projections say the worst of the unemployment crisis will not last long, many businesses will not survive the lull. One recent poll found that 24% of small businesses will close within two months because of the current crisis.

Your suppliers have their own workforces, and they are not immune to the effects of unemployment. Whether within their own walls or within the ranks of their own suppliers or clients like you, unemployment increases will affect your supply chain. Perhaps it will take longer to make goods, or perhaps you will gain surprisingly quick access to certain products because of lower demand as your competitors shut down. Only you can know for sure, so conduct an analysis on your industry and use your data to project changes to your supply chain.

Things will get worse before they get better. Unemployment, small business closures, and rates of infection have a long way to go before they reach their peak. These factors will play major roles in supply chain disruption, so before that happens, use this opportunity to protect your business from the worst of it.


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