Drip Capital, Inc., a leading cross-border digital trade finance platform, today released a report highlighting the broader challenges US SMBs face throughout every node of the supply chain, with recommended solutions to establish resilient operations in the medium to long term.
The recent economic and global events have strained global supply chains, with The New York Federal Reserve’s Global Supply Chain Pressure Index (GSCPI) remaining historically high in July 2022. This has cost businesses trillions in revenue and brand reputation, but the intensity of the impact has been much higher for SMBs. To keep up with inflation, 69% of SMBs reported raising the costs of products/services, while about half have taken loans to cover higher expenses.
Some crucial measures from the report to help guide SMBs towards resiliency include:
- Strengthen Buyer-Seller Relationships: To ensure robust support from suppliers during unforeseen contingencies, SMBs must build and maintain strong, long-term relationships by upping their reorder quantity over time, ensuring timely payments, and more.
- Analyze the Cost-Benefit of Nearshoring/Onshoring: In the long term, SMBs could consider adopting onshoring/nearshoring only after a careful cost-benefit analysis. However, first, SMBs would need to assess if heavy costs incurred in set-up don’t offset the saved dollars (import tariffs, customs, shipment costs), transit time, and effort in moving away from outsourcing manufacturing.
- Adopt Technology: Adopting technology in operations like container tracking tools to add visibility and efficiently manage cargoes can help mitigate risks.
- Efficiently Manage Inventory: SMBs should invest in understanding and implementing best inventory management practices like utilizing the right warehouse management system to automate and improve warehouse management.
- Periodic Negotiations for Updated Prices: SMBs should check whether their existing agreements allow periodic negotiations for updated prices and take advantage of those opportunities.
«We work with SMBs first-hand and understand how they have been struggling from the global supply chain challenges,» said Pushkar Mukewar, CEO/Co-Founder of Drip Capital. «Besides these recommendations, SMBs may benefit by gradually diversifying to higher value-added products, enabling them to stay resilient. Moreover, businesses can seek the expertise of individuals who can guide them regarding various regulations, pricing, transportation, etc., to forecast developments and update strategies accordingly.»