Tips For Managing Small Business Supply Chain and Logistics

Successful supply chain management can help any business lower their costs, improve their efficiency, and even increase their customer satisfaction. Unfortunately, disruptions in a supply chain are common, and they can be particularly challenging for small businesses.

Small businesses often lack the resources that allow them to easily navigate shortcomings in a supply chain. That being said, there are several ways a small business can improve their supply chain management and logistics to get their products on time and keep their customers happy. 

Understanding the Supply Chain—Definition, Challenges, and Solutions

A supply chain is a dynamic network of manufacturers and suppliers that are responsible for producing and delivering products to a consumer. Supply chains usually start with raw material production and end when a finished product is delivered to the consumer.

Supply chains are composed of several different entities that all work together to produce and deliver products and services to an end user. The common components of a supply chain include: 

• Supplier—provides raw materials and goods for production
• Manufacturer—turns raw materials and goods into finished products
• Distributor—stores finished products and delivers them to retailers
• Retailer—sells finished products to consumers
• Consumer—end user that purchases finished products

An effective supply chain translates to lower costs, efficient operations, and quick delivery times. If any link in the supply chain suffers, it affects every other link in the chain.

Supply Chain Challenges for Small Businesses

Small businesses generally offer fewer products and work with fewer suppliers than large businesses do. This makes small businesses more susceptible to product shortages and supplier delays. When a small business has difficulty procuring their products, it can be severely disruptive to their cash flow. 

Another supply chain challenge for small businesses is that most small business owners aren’t experts in supply chain management. This makes it hard for them to effectively navigate disruptions in the supply chain that could lead to delays or missing products. 

These challenges can be particularly difficult for new small business owners that don’t know where to turn when they can’t get the products that their business needs.

Read our related article to learn how businesses can reduce shipping costs.

Overcoming Supply Chain Challenges for Small Businesses

Small businesses that take a proactive approach with their inventory management are less susceptible to supply chain disruptions. To stay ahead of supply shortages, small business owners should forecast future customer demand and stock their inventory accordingly.

Small businesses can also avoid supply chain disruptions by diversifying their suppliers. Working with alternate suppliers will ensure a business can still stock their inventory when their primary supplier can’t meet their needs. To diversify suppliers, small businesses should connect with various suppliers and source specific products according to each supplier’s speciality. 

Building strong relationships with suppliers is also important for small businesses. Strong supplier relationships can lead to better terms, priority service, and foresights into upcoming supply chain issues. To improve supplier relationships, small businesses should communicate effectively, be flexible, and make on-time payments.

Sometimes, disruptions in the supply chain are unavoidable, and they have the largest impact on small businesses. Read our related article to discover how Open Road is the shipping solution for small businesses. 

Understanding Logistics—Definition, Challenges, and Solutions

While supply chains encompass the entire process from raw material production to product delivery, logistics focuses specifically on the flow of goods from beginning to end. To put it simply, logistics is a subset of the supply chain that’s responsible for moving and storing goods.

The main components of the logistics process include:

• Transportation 
• Warehousing
• Inventory management
• Order fulfillment

Logistics is a crucial part of a supply chain that allows businesses to operate efficiently, get their products quickly, and meet their customers’ demands. 

Logistics Challenges for Small Businesses

Small businesses often lack the resources and personnel to effectively manage logistics on their own. This usually means they can’t invest in helpful tracking software or have a staff dedicated to their shipping needs. 

Another logistics issue for small businesses is high transportation costs. It’s expensive to ship small orders, so small businesses often have to wait until they can submit a full-sized order. Also, it usually isn’t cost-effective for small businesses to purchase their own vehicles to make deliveries. 

These challenges force small businesses to work around their suppliers schedule, which often leads to slow delivery times or high delivery costs.

Read our related article to discover shipping tips for small businesses.

Overcoming Logistics Challenges for Small Businesses  

Small businesses can overcome some of their logistical challenges with careful planning. This can involve ordering products well in advance and creating a buffer inventory to account for delivery delays. Also, small businesses should be diligent with their inventory management and forecasting to reduce sudden shortages or unexpected customer demands.

Another way that small businesses can take logistics management into their own hands is by outsourcing their deliveries with third parties. This allows small businesses to have access to drivers and delivery vehicles without the costs of employee salaries or vehicle upkeep.

Read our related article for a full guide on in-house vs outsourced delivery.

Open Road: The Small Business Shipping Solution 

Open Road is dedicated to helping small businesses overcome their supply chain and logistic challenges. When you ship with Open Road, you gain access to the same resources that large businesses have— without the high costs.

We offer low shipping costs and quicker delivery speeds by going straight from the source to your business. Our easy-to-use app allows you to track your deliveries, circumvent bottlenecks, and get your supplies when you need it most. 

Sign up for free today, and see how Open Road is the small business shipping solution.