Small Businesses Snagged By Supply Chain Disruptions

Among American companies, logistics problems are causing big headaches. With the supply lines clogged, companies are finding new ways to conduct business. It’s not only the pandemic that is causing a shortage of products: A variety of other problems are being blamed for shortages in small businesses.

According to The Wall Street Journal, bad weather, the closure of the Suez Canal, staffing problems and a backlog at American ports are all wreaking havoc on small companies that have plenty of customers, but nothing to sell them. And those that do have supplies are marking them up at premium prices. Meanwhile, flush with stimulus money, vaccines, work-from-home fatigue and sunny spring weather, Americans are ready to spend.

Forty-four percent of small businesses said they were experiencing temporary shortages or other problems in March, according to a survey by Vistage Worldwide Inc., a business advisory firm. And the U.S. Census Bureau’s April survey said there are supply chain disruptions in the wholesale manufacturing and construction sectors, reported WSJ.

In addition, the supply chain still lags behind in digitization, PYMNTS recently reported. “The challenge is to digitize things end-to-end,” said David Shillingford, CEO of Everstream Analytics. “If your payments are digitized, but the actions on either side of them or in parallel with them are not digitized, then you’re missing a lot of opportunity.”

The sharp divide between supply and demand is experiencing a turnaround compared to a year ago, causing prices to jump for high-demand items. “If a steel supplier has even a little supply, they are raising the prices, knowing it will be difficult for them to replenish their stock,” explained Matt Erfman, chief executive of Dakotaland Manufacturing, a Sioux Falls, South Dakota contract metal manufacturer with about 150 employees, WSJ reported.

The cost of lumber to build crates and pallets has risen by 50 percent to 100 percent, said Heather Chandler, president of Sealstrip Corp., a Gilbertsville, Pennsylvania manufacturer of packaging products. And seasonal delays are also causing problems: Some American clothing companies are still receiving shipments of hoodies and other winter items from warm-weather foreign countries. Other companies are boosting inventory and placing orders as far ahead as 12 months into the future, while some cautious firms are relying on investment monies to improve efficiencies.