Challenges Small Companies Face to Overcome the Supply Chain Hurdles

Small companies operate a tight ship due to various limitations. Their budget, workforce, cash flows, and client base are some of the constraints to consider. Also, they struggle with taxation policies, government regulations, and compliance rules. Moreover, their profits and productivity depend on the quality of the supply chain.

Unfortunately, small company managers encounter many problems here. Procurements get plagued by miscommunication and unnecessary delays. Every trading partner does not give too many pricing breaks to suit small companies, and any little inefficiency in product delivery and shipping models will cause significant backlog and loss. 

Thankfully, computer and internet technologies are all prevalent in the world. By investing in automation and digitization, some hurdles can become smaller. The supply chain workflows can become streamlined and electronic data interchange (EDI) can create efficiency. But the problems also become more diverse and challenging for the supply chain managers.

Main obstacles

Manual processes

Data entry and retrieval using manual methods are inefficient and slow. It is challenging to generate error-free reports, invoices, and purchase orders. Also, the paperwork has to get organized, managed, and archived using tedious procedures. An increase in manual labor and complexity to do all this work would be tremendous and redundant.

In contrast, computerization and mobile access are accurate and fast. The manager can retrieve pertinent data in real-time. By adopting new technology and automation (RPA), data storage, processing, and management also become simplified. And cloud connectivity, mobile data collection, and voice-controlled solutions offer superior strategies.

IT security

Supply chain processes require regular network access for data. The integrity, accuracy, safety, and security of data come into question. The best supply chain solution with security leaks is a significant liability and a costly lawsuit. Hackers target weaker networks and ransom a heavy price after stealing essential data.

Automated solutions with due diligence for preventive security is essential. Cybersecurity has to be a priority, and encrypted methods are becoming basic standards. The best security software assures the manager’s peace of mind and productive efficiency. 

It is not just about the security of your infrastructure. The data security of every partner in your supply chain is essential. Data leakage can occur at any point in the supply chain if you do not have trade partners who take data security as seriously as you do. It is better to break off a relationship with such weak trade partners. If their IT infrastructure is not fool-proof, then you, too, will become vulnerable. The other challenge here is the budget to incorporate those changes.

Third-party logistics

Some companies have the infrastructure, resources, and expertise in storing and shipping products. Partnering with them is not as straightforward as it looks. Third-party logistics can quickly turn into a nightmare even for proficient managers. But the advantages are one too many to ignore, so many businesses go ahead.

You can save storage space, reduce costs, lower risk, and save time. You can also improve the productivity of supply chain workflows. But do not rush into signing a contract with any 3rd party partner. Look into their credentials and proceed after doing a thorough cost-benefit analysis.

There are too many third-party logistics services providers in the market. Yes, they manage the warehousing, inventory, and fulfillment processes. For small companies, this may seem like a great relief. But such outsourcing brings challenges related to contracts, tools, data security, management, and automation.

Cost efficiency

Supply chain operating costs grow with new technologies. They also rise because of fuel, energy, and HR expenses. But cutting down costs is not an easy hurdle to cross for the management. Small companies have to introduce innovation without creating workforce resentment.

They can rely on mobile data collection tools to lower inventory mistakes. It will help improve the company’s sales in the long run. Tools like product trackers, barcode scanners, and digital forms are vital for controlling costs. Cost efficiency also is possible with cutting unwanted resources, automation, outsourcing, and so on.

HR and teamwork

Reducing HR costs is always high on the agenda of a small company. But supply chain processes are not only crucial but also complicated. Besides, the data-intensive workflows have to be accurate, prompt, and reliable. Such an activity requires teamwork and efficient duty delegation.

Supply chain managers can get vexed by the dynamic environment. Real-time events are unpredictable, and experts are essential. Scalability becomes a nightmare in many cases. Every company aspires to change its capacity to adapt to the seasonal change in demand. But finding experienced candidates and recruiting them can be an expensive affair. Besides, they have to be on-boarded and acquainted with the office culture.

Building a reliable team takes time, and managers have to be patient. They should factor in business needs, inter-departmental conflicts, training costs, etc. Ultimately, hiring the right person for the right job is essential to ensure productivity and profits. 

Conclusion

To sum up, small businesses have to do a fine, balancing act. They have to manage the supply chain for qualitative and cost improvements. At the same time, they have to deliver customer satisfaction and lower the risk of doing business in a competitive environment.

Otherwise, the company not only loses customers but also trading partners. With technological infusion, efficiency improved a great deal. But the threats are also equally alive, and overcoming these hurdles is paramount.

SmartEDI, can be your partner to easily onboard the customers to kick start the EDI transactions in a smarter way. Our solution is easy to install and run efficiently irrespective of any infrastructure challenges while being highly portable, flexible and scalable. An assured increase of 80% to 90% is observed in on-boarding new partners. The time and money invested are drastically brought down to 10% to 20% for existing solutions. Check out the link to know more.

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