Supply Chain Problems Are Hitting Small Businesses
Disruptions in the global supply chain are making a big impact on small businesses in the U.S. According to a survey of roughly 800 companies by business advisory firm Vistage Worldwide Inc., reported by The Wall Street Journal, 44% of small businesses reported shortages in March. The U.S. Census Bureau surveyed small businesses in April and found supply chain problems in industries such as wholesale trade, manufacturing and construction, the Journal reports.
The Wall Street Journal also reported that coronavirus infections, temporary business closures, increased demand, California port backlogs, the block at the Suez Canal and weather-related problems have all contributed to interruptions in the supply chain. The interruptions are especially challenging for small businesses, which often have fewer purchasing options compared to large corporations.
Consumer demand hasn’t subsided. In fact, demand has surged in some product categories. U.S. grocers, for example, had difficulty adjusting to the decline in demand from restaurants and cafeterias and the rise in consumer demand for different products or different variations of products, according to the Harvard Business Review.
This problem started early in 2020 when the pandemic shut down China for two months. While China recovered, the rest of the world went into lockdown. Although spending on travel was almost nonexistent, spending on electronics, home furnishings and many other goods went up, reports CNBC.
“In times of supply chain constraints and increased risk, the bigger companies seem to get preferential treatment,” said Richard Weissman, a part-time professor of business at Endicott College specializing in supply chain and operations management, in an email interview with The Balance Small Business.
The cost of lumber has increased by 50 to 100%, explained Heather Chandler, president of Sealstrip Corp., a small business that sells resealable tape, machinery and other packaging supplies to big consumer-products companies, told The Wall Street Journal. “One of the biggest challenges of being a small company is we buy from billion-dollar companies and sell to billion-dollar companies,” which makes it difficult to avoid price increases or pass them on to customers, she said.
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