San Francisco Bay Area SMB Owners - Don't Panic About The Business Supply Chains
Remember when the monster cargo ship Ever Given jammed the Suez Canal? After the Givenhad been stuck just five days, almost 400 other freighters were backed up waiting to pass through the Canal. Experts began predicting temporary shortages of everything from exercise bikes to coffee, cheese to semiconductors.
For once, they were right -- and not just because of one stuck ship.
Recent events have proven how the world’s business supply chains can snap pretty easily (even now as I write, dozens of giant freighters wait off the coast of California because there’s no dock space).
And have you been in Costco or Walmart lately looking for toilet paper or toys from China? Sometimes all that happens is a great chance for the store workers to dust the empty shelves and for you to pull out your phone and hope you can find online what you came into the store for.
Well, your customers are no different if your business supply chain is weak. And soon they’re going to take their business elsewhere. Frustration is the one thing not in short supply these days.
But don’t panic. I have thoughts.
Before I get to them, one more reminder that October 15th is the deadline for extended federal personal tax returns for 2020 (for the vast majority of the country).
If you need a quick chat on this, grab time here:
Now, let's talk about those business supply chains...
San Francisco Bay Area SMB Owners - Don't Panic About The Business Supply Chains
“Teach a parrot the terms ‘supply’ and ‘demand' and you've got an economist." - Thomas Carlyle
First, as a frustrated San Francisco Bay Area business owner you’re not alone. There are many reasons that stuff is scarce for everybody now:
- Higher shipping costs -- particularly from China;
- Not enough containers to store goods on the freighters (Costco and Walmart have also chartered their own ships to transport goods to secondary ports);
- Social distancing restricting ports’ speed unloading;
- Not enough truckers to get the stuff on the road even if it does get through the ports;
- People shopping again -- and in big numbers, suddenly driving up demand;
- Rotten weather in a lot of places.
If one thing gets hung up in transit in the business supply chain, then other stuff made from that first stuff gets hung up, too -- often stuff your San Francisco Bay Areabusiness needs to function and to sell. Foam for furniture, electronics for cars, chemicals for paint. Prices spike for necessities like lumber for pallets. The dozens of other points in the chain are also vulnerable to labor shortages and other breakdowns.
It’s like getting the kids off to school on a crazy morning: One hitch and the whole schedule can fall apart.
… just like your relationship with your San Mateo customers when they’re staring at your empty shelves.
Seat of your pants
You may find yourself relying on gut feelings and improvising through your company’s supply crunch in the coming months.
Money makes the world go ‘round -- and it can make the supply chain go ‘round, too. Don’t spend like crazy, of course, but the hard truth right now is that you may have to pay a little extra to keep supply lines flowing. That means keeping your capital liquid and available as much as possible. Maybe a flexible line of credit can help keep your inventory stocked.
Your other moves:
- Buy ahead to anticipate demand (like they’re saying about Christmas shopping this year, “If you see it right now, buy it right now…”). Rent warehouse and other space to shelve overflow inventory.
- Keeping your own business supply chain strong depends on shipping. You may have to shell out for priority or “less-than-load” (LTL), a way of getting a small load of specific goods where they need to be that can save money for small shippers like you.
- Find additional suppliers or partner with another retailer.
- Don’t forget, your customers still like you (at least they will until your inventory runs out…). Ask them what products they want to see more of and less of? Watch your online reviews, too … “They were out of it” is a common complaint you want to avoid or address ASAP. If you’ve got an online business, survey customers electronically.
- Keep up with the news. From West Coast pinch points to Costco rationing toilet paper again, this mess changes fast.
It will get better (fingers crossed)
Remember, when the business supply chain breaks, it’s not just your cupboard that’s bare -- everybody loses money. And everybody’s struggling to fix the problem.
Managing supply chains is no longer some minor business function stuck in the back office. The big boys have learned the hard way to make it an operational priority -- probably for months to come -- and give the job the resources it requires.
Your business is in the same boat, so to speak, just on a smaller scale.
You’ll get through this, and we’re here to help you do it.
(408) 241-4100
Stay safe and sane out there,
Patti ONeill and Gale Bergado
(408) 241-4100
ONeill & Bergado