How to manage supply issues

Economic disruptions can lead to delays in the delivery of commodities and supply issues. This affects small businesses because it creates bottlenecks in their processes, disrupts how they cater to their customers, and impacts their bottom line. This is why it is essential to find a way to manage supply issues. 

In this video, I show what you can do to minimise the effects of tight supply. 

  • Improve how you make forecasts for your business 

Knowing how much you need each month will make it easier to decide how much inventory you’ll need to keep. When there is a tight supply, it will be easy to determine how much additional stock you can afford to ensure that you have enough to tide you over in case you experience delays. 

Making accurate forecasts entails having a good grasp of two basic things: customer purchase patterns and supply cycles. When do your customers buy? When are your peak months? When are your lean months? Are the patterns predictable? How about your supply cycles?  

Understanding these cycles will help you decide when to increase supply and product inventories to help manage disruptions. 

  • Nurture relationships with suppliers 

Having a perfect relationship with your suppliers may be the thin line that determines whether you get stuck. It may also be the difference between getting crucial information about stock issues. It helps you stay informed, which may help you plan and forecast. 

  • Learn how to pivot your products and services 

If, despite best efforts, you fail to secure the necessary stock or if more is required to sustain the business, this is a good time to consider pivoting your products and services. Do you need to find alternative input for your products? Do you need to trim down your product line? Do you need to offer something else? 

In 2022, McDonald’s in the Philippines experienced a tight supply of frozen fries due to the global freight crisis. While they could still offer fries with their burgers, it was not enough to cater to the usual supply. They can only offer regular-sized fries. This changed how they offered their burger bundle meals, which typically offered customers the option of upsizing their fries in the bundle. So instead, they started offering other add-ons to their bundles, such as Apple pies and sundaes, aside from regular fries. This provided customers with variety while addressing McDonald’s fries supply issues.  

Similarly, KFC Australia was forced to put cabbage in its burgers and wraps instead of lettuce. This is because the price of lettuce rose from an average of $3 per head to over $10 due to floods that strained domestic supply.  

  • Communicate, communicate, communicate 

When making changes, make sure that your customers are informed. Going back to the McDonald’s Philippines example, the fast food chain communicated their supply woes in various ways: through social media, through signs that can be found in-store, and through crew members who painstakingly explained why they could not offer large fries and offered alternatives instead. While it took some time and a lot of communication for customers to understand the situation, they eventually adapted to the new menu.  

  • Learn from mistakes and experience 

Experts call the pandemic a black swan effect, which is challenging to plan for but brings potentially severe consequences. Nobody could have predicted the effects of a pandemic that affected the entire world population, and neither could anyone have predicted the negative domino effect that impacted the world economy.  

However, the silver lining is that it provides us with experience overcoming the problems that this black swan effects. In the long term, it helps us better respond to these issues and will help us better manage consequences when they happen. The smart thing to do is to learn from this, carry the lessons, and move forward with them. 

Whether it be the pandemic or another black swan that creates supply issues in the post-pandemic normal, the strategies I outline above can help small businesses not only pull through crises but perhaps even help scale up and grow. There are many good reasons to improve how you forecast your supply and sales, nurture supplier relationships, pivot your products and services—even find new ways to generate revenue, communicate with your customers and all stakeholders, and learn from past mistakes and experiences. 



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