Nearly half (47%) of procurement leaders at small businesses report that supply chain disruptions — including raw material scarcities, shipping delays and worker shortages — have made it challenging to keep up with consumer demand over the last year. With many experts predicting supply chain interruptions persisting well into 2023, the procurement journey will likely remain complicated for small-to-medium businesses (SMBs) this year.
By virtue of operating an enterprise with less cash flow, SMBs grapple with unique obstacles. Supply chain visibility is relatively low, making it challenging to connect with new suppliers. Additionally, procurement leaders often operate with fewer tools than their counterparts at large enterprises, complicating the sourcing process. Generally, these disadvantages are difficult but not debilitating. However, extended supply chain disruptions have exacerbated these challenges, turning minor struggles into opportunities for disaster.
In this buyer’s market, how can you compete with larger enterprises to score vital relationships while remaining nimble in the face of supply chain challenges? Here are a few promising methods for boosting revenue.
Business Agility Critical for SMBs
Supplier delays increased for SMBs in the latter half of 2022. According to U.S. Census Bureau data, 38.8% of SMBs reported domestic supplier delays in Q3 of 2022, up about 10% from the previous quarter. These delays were particularly egregious in manufacturing and retail, taking significant time to solve. Approximately 19% of small business leaders reported difficulty finding an alternative supplier when delays continued, resulting in longer project timelines and frustrated consumers.
Strategic stockpiling is a convenient answer to supply chain woes for many enterprises, especially those sourcing from Asia. Last year, more than half of mid-sized businesses stockpiled raw materials and critical parts to account for supply chain disruptions, according to JP Morgan Chase. These reserve stores come in handy when a supplier falls through or a project timeline becomes otherwise delayed, necessitating quick action to fulfill customer orders. The ability to meet increased demand — especially when other enterprises fail to do so — can improve consumer sentiment and loyalty.
But stockpiling is a tall order for many, one that carries significant business risk. What if a product doesn’t sell as much as anticipated? Although larger enterprises can bear the brunt of a miscalculation, many SMBs cannot. Therefore, you need to find alternative solutions to inventory shortages.
Prioritizing tools that enable other modes of business agility is a critical capability. Creating a foolproof map of second- and third-tier supplier relationships is ideal, though not always realistic during prolonged supply chain disruption. Seek out data platforms that allow real-time pivots to new supplier options. Access to robust updated data helps drive sourcing decisions in a much shorter timeframe. Thus, if a particular SKU becomes unavailable through a standard supplier, you can quickly connect with alternative, high-quality suppliers.
The trick here is to identify a consistent and error-free data source. Artificial intelligence (AI) and machine learning (ML) tools may come in handy, as automatically updated data ensures supplier information is accurate and correctly formatted. Moreover, this real-time data gives you vast options for alternative sourcing, putting you in front of top suppliers. In other words, it’s a two-way street with multiple benefits. Let’s unpack how.
Accurate Data Enables Critical Purchasing Decisions
Traditionally, SMBs use marketing channels to increase their profile among larger buyers. This tedious process must be repeated for all accounts and requires a sizable marketing budget. Conventional methods of sourcing also ask suppliers to update their data manually through various portals. Neglecting to do so can result in inaccurate data flows that penalize you through lost business or outdated orders. For example, if outdated data suggests a supplier can source a particular product when it’s actually out of stock, you’ll lose time and money tracking down an item that doesn’t exist.
Finally, many SMBs invest significant time and effort searching for suppliers with official certifications. They can often meet sustainability and corporate responsibility goals by contracting with suppliers that fall into a diverse spend category, including environment and social governance (ESG) businesses, minority-owned and woman-owned enterprises. However, although globally recognized certificates are the traditional method of verifying a supplier’s commitment to diversity or sustainability, many suppliers cannot afford to become certified. As a result, you’ll have a difficult time identifying truly diverse suppliers, especially if they’re also small businesses.
Ultimately, to find diverse suppliers and meet mandated quotas, businesses often rack up dozens of wasted hours on rote data updates, certification processes and resource-intensive marketing efforts. While important, these frustrating tasks are only sometimes necessary to achieve supply chain visibility.
An AI-powered data platform eliminates the need for manual updates, automatically providing access to thousands of diverse suppliers. That’s because ML-based algorithms pore through an organization’s SEO data before classifying their operation as small or diverse. Equipped with this information, you can review diverse suppliers, even if they haven’t gone through an official certification process.
Carefully consider the benefits of enhanced data and supply chain visibility. Implementing changes to strategy and tech stacks now will ultimately result in a more financially fruitful 2023.
Angela Anastasakis is Vice President of Customer Experience at TealBook