Supplies, Demand and a Bottle of Aspirin
Tips on dealing with continued supply chain issues
Keith Twitchell spent 16 years running his own business before becoming president of the Committee for a Better New Orleans. He has observed, supported and participated in entrepreneurial ventures at the street, neighborhood, nonprofit, micro- and macro-business levels.
While the worst of pandemic-induced supply chain issues seem to be behind us, the situation remains challenging for businesses large and small, old and new. It is probable that timely and affordable access to supplies will remain a substantial headache for entrepreneurs far into the future.
Some of this is fallout from the pandemic. Wholesalers and warehousers are less inclined to keep large inventories on hand, in part due to more fluctuations in consumer and thus retailer demand. Worker shortages impact manufacturers, shippers, warehousers and everyone else in the supply chain just as much as they do at the retail end. Many manufacturers are facing their own supply problems.
To this mix, add increasing weather impacts, international trade tensions and the war in Ukraine, among other factors, and the supply chain situation looks like a serious horror show. But dealing with it is unavoidable, so what are the best options for business owners?
“The key word is flexibility,” stated Ed Webb, former CEO of the World Trade Center in New Orleans. “Talk to your suppliers and see how flexible they are, in terms of the timing and quantity of supply delivery. Make sure you negotiate your terms on the front end and see if slower payment terms might be available. Most suppliers realize that if they don’t work with their clients, they will be out of business next year.”
In addition, added Webb, “this might be a smart time to look at your product mix, do some shopping, see if you can get new suppliers and better prices.”
Supply chain issues are particularly acute for smaller and newer businesses, according to Dr. Cheryl McCloud, who teaches supply chain management at the American Military University.
“Larger firms tend to control everything from supply chains to communications technologies,” she observed. “Small businesses have always had to connect through whatever mechanism is available to them.”
In this context, McCloud recommends that small businesses team up with each other, “and possibly with larger businesses. This will create economies of scale, and possibly even provide access to newer technologies.”
Webb suggested that going local is another potential recourse.
“Any time you can find a local supplier or a regional supplier that’s competitive, you should look into it,” he commented, pointing out that this approach can help alleviate everything from transit issues to weather disruptions.
That said, even smaller local businesses often draw on global suppliers to meet their needs. The Far East remains a top producer of goods and raw materials; however, especially in the case of China, this region is becoming ever less reliable as a source.
Raine Mahdi, founder and CEO of online trade broker Zipfox, suggests an alternative.
“Mexico is much closer to home,” he pointed out. “There are no tariffs, shipping takes much less time, no political tensions between our countries. They are even in similar time zones.”
Mahdi was himself importing supplies from China but found it increasingly untenable.
“Mexico seemed like the most obvious place to look, but there was no structure. Even if I found what I needed, I didn’t know how to engage.”
This led him to create Zipfox, which essentially serves as an online trade broker between Mexican and American businesses. All Mexican suppliers are thoroughly vetted before being included, and the company provides comprehensive payment protection. American businesses can use the platform to contact suppliers directly, negotiating terms, shipping and all other details themselves.
“You may never actually need to talk to Zipfox,” said Mahdi.
While supply chain headaches may be a permanent reality, businesses can find ways to minimize them.
“Be realistic, be flexible, be resilient, do your homework,” he said. “Come up with a Plan B and a Plan C. But if you don’t do the work now, it could come back to haunt you later.”