How Problems with Your Supply Chain Can Derail Your Business Venture

If you’re running a business, you can encounter many problems that might stop you from attaining your goals. For instance, you may lack enough competent employees, or perhaps you can’t retain them. You might even have someone sue you if you make a product that harms them or makes them ill.

Such lawsuits can hurt your reputation, but you can usually deal with them expediently. About 95% of civil cases never get to trial, and if you can come up with a figure that satisfies the plaintiff, you can probably get back to business relatively quickly. You just have to make sure you don’t make the same mistakes again. Putting stringent product testing in place should help.

There’s one problem that can cause you massive headaches as a business owner if you can’t find a way around it, though. If you’re having supply chain problems, that can practically bring your company to a standstill. In this article, we’ll discuss supply chain issues and how you might figure out some solutions. 

What Does Supply Chain Mean?

In the business world, the term “supply chain” refers to a logistical system your company has in place. Your supply chain involves the acquisition of materials to create your products. It also means the distribution of those products once you’ve made and packaged them. Your supply chain’s final result should involve your products sitting on a store shelf in a store that has agreed to carry them.  

In the modern world, companies offer just as many services as products. For instance, while you might make something physical, like a floor mat for cars, you may offer only a digital product, like a bespoke software system that companies use for better employee collaboration.

If you think about how a supply chain works, you’ll quickly realize why it is more crucial for companies that make physical products. If you make floor mats for cars, you need to get them to the car companies that ordered them or onto the shelves of brick-and-mortar store locations that agreed to carry them. 

With a digital product, like an eBook, a bespoke software system, etc., you don’t need a truck to carry that product to the customer. They can purchase it with a few quick keystrokes on a laptop or desktop. 

You May Need Raw Materials for Your Products

Let’s assume for the sake of this article that you’re a company that makes physical products. Presumably, you will need raw materials to make those products. 

If you make something relatively simplistic that doesn’t have many ingredients or components that go into making the finished version, then you might not have as many supply chain issues. However, if you make a product that requires many components to complete it, it’s more probable that you will run into a supply chain problem at some point.

When such issues happen, you might be able to resolve them relatively quickly. It all depends on the nature of what you make and what you require to make it. 

However, every once in a while, you will run into a supply chain problem that makes your whole assembly line grind to a halt. For instance, if you are the Kellogg’s company, and you make Corn Flakes, you can’t make your product without corn. If there’s no corn, you must stop production of that product until you can rectify the situation. 

You Might Have Issues with Transportation

If you run into supply chain issues, often, you can look at transportation and say that’s where the problem occurred. For instance, maybe you get your raw materials from overseas. You rely on ships to bring you the raw material periodically. When the ships arrive at a port in the US, your workers load pallets of those raw materials onto trucks that carry them to the warehouses where you store them until you modify them into the eventual finished product that you offer to consumers.

If any part of that system breaks down, it means delays and a loss of profit. Your shareholders won’t like that if you have any. Neither will the stores that agreed to carry your products. 

You can look at the Covid-19 pandemic as a perfect example of supply chains breaking down. If you went to a grocery store during that time, you might have seen plenty of a certain kind of item and none or almost none of another. That’s why you’d see people hoarding boxes upon boxes of tissues and other essentials they felt they needed.   

Set Up a System Where You have Multiple Suppliers for Vital Resources

If you make and sell a physical product, and that’s the main way your company functions, you should have a robust and flexible supply chain in place. Ideally, you want more than one supplier of each component that goes into your products. 

Many times, if you need a certain raw or unprocessed material or ingredient, you can get it from more than one source. Perhaps one source will charge a little more than another. However, if you have relationships with as many suppliers as possible, you’re in a much better position to weather the storm if one of your go-to partners suddenly says they can’t get you what you need. 

You should also have different transportation options if at all possible. If you use planes, you need relationships with several airlines. If you use trucks, have relationships with multiple trucking companies, and so forth.

Occasionally, you might make a product that requires a certain ingredient or component that only comes from a single supplier or just one part of the world. You might make such a business profitable, but keep in mind that at any moment, you face a potential supply chain bottleneck. If the company or entity that supplies that material or component either can’t or won’t work with you for some reason, your company will likely remain in crisis until you resolve the matter.