A small business has a smaller margin for error. A problem along its operations may have a long lasting negative impact on profits and sales. However, challenges in any industry are inevitable. One such problem you as an owner may experience is a supply chain disruption. This may lead to delays in inventory deliveries, which may then affect your supply. You might run out of products and fail to meet the demand of customers. It is best to prepare for such a situation.

 

Here are ways you can prepare for a supply chain disruption.

 

Look for Other Suppliers

When a disruption occurs along the supply chain, it’s ideal to have other suppliers to choose from. This provides you with an option to purchase inventory when your current supplier can’t deliver what you need. This keeps sales going and allows you to meet demand. Before you choose other suppliers, make sure they have good quality control. This ensures that you maintain the quality of the products you sell to customers. It’s also important to maintain a consistent bookkeeping process so that you can monitor cash flow and transactions with the temporary supplier.

 

Have a Backup Plan

One of the negative effects of supply chain disruption is low inventory. It helps to have a backup plan in these situations. Create a plan that provides you with ways you can move products at the lowest possible cost. This provides you with flexibility to stretch your finances and make the most out of your remaining resources. Establish an emergency fund for instances such as disruptions in the supply chain. This boosts your cash flow to find suppliers and purchase inventory at the last minute.

 

Supply Diversification

Diversification is a shrewd approach to supply chain management. This reduces your risk whenever a disruption occurs. These can be natural disasters, bankruptcies, delays in deliveries, shortage of materials and others. The odds of simultaneous failures to deliver are low, but if you have a diverse supply base, you can still get inventory even when disruptions take place. Look for suppliers that offer the same quality goods and services. Identify which ones offer ideal payment terms and delivery schedules. Try to get suppliers from different cities; this adds a layer of protection from any disruption.

 

Conduct an Audit

An audit provides you with an overview of your small business’ operations. It allows you to identify which aspects need improvement. Audits also enable you to determine vulnerabilities in your supply chain. You’ll find out possible changes in pricing, routes, political situations and environmental factors that may affect delivery times and compliance. Even if you own a small business it helps to conduct an audit of your company.

 

Increase Inventory

One way to prepare for a supply chain disruption is to increase your small business’ inventory. Extra stocks allow you to meet the demands of your customers, if ever a problem with delivery arises. However, before you do this, make sure you use forecasts based on past sales. This prevents you from creating an overstock problem.

 

These are some tips that enable you to prepare for a possible disruption in your small chain. Preparation provides you with more flexibility and saves money. If you need help with bookkeeping, feel free to review Robookkeeper’s outsourced accounting services. We can connect you with first-rate bookkeepers that provide quality output.