Small and medium-sized businesses have faced supply chain challenges for the last four years. These challenges started when the COVID-19 pandemic struck the world in 2020, forcing countries to shut down their entire supply chains for several months as a safety precaution.
Unfortunately, supply chains have not completely recovered from those shutdowns, even though the transportation restrictions have been lifted for a couple of years now. Businesses continue to see logistical and financial challenges in the supply chain that reduce their productivity and profitability.
Here are the top 5 supply chain challenges facing small and medium-sized businesses today.
1) Demand Forecasting
Every successful business owner understands their customers and what products they want. More importantly, they can predict what their customers will demand in the future based on current market trends, historical data, economic conditions, geopolitical tensions, and more.
Demand forecasting was a lot easier before the market became as volatile as it is today. Now, many more factors adversely influence demand forecasting for small business owners, such as new seasonal trends, natural disasters, and data limitations. Since the marketplace is highly competitive, business owners need all the help they can get to overcome these demand forecasting challenges.
The unpredictability of the current marketplace will require you to use advanced forecasting software for assistance in making future demand predictions. For example, users of the Xero accounting software can access several trusted business forecasting add-on apps in the Xero App Store to assist in demand forecasting.
Three great Xero apps for demand forecasting are Float, Spotlight, and Fathom. They can scan through your historical sales and inventory data to predict various future sale scenarios. If you were to try and do this yourself, it would take far too much time. So, let the software do it for you because it can do it faster and more accurately.
2) Supplier Management
Business owners heavily depend on their suppliers to manufacture or supply the products they wish to sell to their customers. That is why supplier management requires you to choose high-quality suppliers, monitor their activities, and ensure they are satisfying your order requests when submitted to them. It is also imperative to maintain good relationships with your suppliers because any supply shortages or inefficiencies could spell trouble for your business.
Dealing with an unreliable supplier can be a severe supply chain challenge. Sometimes, the supplier may face unavoidable circumstances that prevent them from delivering your goods on time, such as new trade restrictions, tariffs, unforeseen weather events, and raw material shortages.
Whatever the reason, a problem with your supplier will become a problem for your business if you cannot restock your inventory to satisfy your consumer demand. The best preventative solution to this problem is to partner with multiple high-quality suppliers. That way, if one of your suppliers has a problem that disrupts the supply chain, you can turn to an alternative supplier to satisfy your order immediately.
The easiest way to manage all your suppliers and order requests is through procurement management software, such as those that integrate with Xero. You can find plenty of procurement management apps to add to your Xero accounting software, such as Precoro, ProcureDesk, CostTracker, and PLANERGY P2P.
3) Inventory Control
Business owners must practise inventory control to monitor and manage the number of goods in stock. The objective is to have enough products in stock to satisfy consumer demand. The worst thing that can happen is to run out of products that customers want to purchase. This will cause you to lose money and upset the customers to the point where they will shop elsewhere for them.
One challenge is losing sales due to a lack of supply in the supply chain. The other is trying to avoid overstocking your inventory with too much of a particular product that has low consumer demand. Excess inventory increases storage costs and causes you to lose profits.
Practising demand forecasting and avoiding supply chain interruptions are the best ways to maintain inventory control for your business. Xero’s smart inventory management software can help you do this by tracking your stock levels to see what is selling and what is not selling. From there, you can make more insightful decisions as to which supply orders you need to submit.
4) Inflation and Rising Costs
Despite what government economic reports may indicate, inflation continues to be a big problem for businesses worldwide. Businesses in several industries have experienced rising costs for stock supplies, raw materials, shipping fees, and other supply chain-related expenses. These increasing costs have diminished the profits and decreased the buying power of many businesses, making it more difficult to satisfy consumer demand.
Combating inflation is challenging. The best solution for dealing with higher supply chain expenses is to search around for other suppliers offering lower prices or long-term contracts with low fixed prices. Contracts can help you lock in good prices without inflation making them fluctuate.
5) Outdated Inventory Management Software
Many businesses continue to use outdated inventory management software that lacks the features needed to keep up with today’s inventory demands. Some companies may feel like they don’t have the time or money to upgrade their inventory management software or move their operations to a new software program entirely.
Xero’s inventory management software makes it easy to integrate your inventory data from other software with Xero’s software so that upgrading or switching your inventory management software doesn’t have to be a hassle.
Supply Chain Consultants Have the Solutions
Navigating modern supply chains is a more complex and strenuous task. As a business owner, you are better off seeking the services of professional supply chain consultants like BlueHub to help you overcome your supply chain challenges.
BlueHub provides professional digital supply chain consultation services to small and medium-sized businesses that deal with supply chain challenges. After a comprehensive review of your company’s supply chain obstacles and needs, BlueHub’s digital supply chain consultants can recommend the best solutions to eliminate these obstacles and restore the strength and stability of your supply chain.
